Bitcoin (BTC) Is Not a Hedge Against Market Crash, Declares Lebanese-American Finance Author Nassim Nicholas Taleb

Lebanese-American finance author, Nassim Nicholas Taheb has declared that Bitcoin (BTC), the world's largest cryptocurrency, is a poor hedge against market crash.

Finance author Nassim Nicholas Taleb has asserted that Bitcoin (BTC), despite being the world’s largest cryptocurrency, is not a suitable hedge against market crashes. Taleb has frequently engaged in public discourse, expressing his contrasting views on Bitcoin as a hedge and store of value, in light of the cryptocurrency’s speculative nature and price instability.

During a heated discussion on CNBC’s Squawk Box, Taleb elaborated on the role of Bitcoin in modern finance, highlighting that its touted capability to serve as a hedge against inflation or market crashes has been largely overstated. Criticizing BTC and the crypto industry at large, Taleb argues that Bitcoin is an extremely speculative and volatile asset.

Emphasizing this, he stated that the speculative nature of the cryptocurrency renders it unsuitable to be a reliable store of value during periods of economic turmoil. Taleb bases his criticism on Bitcoin’s recent crash, which saw its price drop by over 20%.

The finance author pointed out that the cryptocurrency’s massive downtrend proves “once again that it is not a hedge against assets melting.” Earlier in July, the Bitcoin market experienced large-scale liquidations, triggered by Mt. Gox's BTC distribution plans and sell-offs executed by the German government.

Presently, the cryptocurrency is witnessing a significant decline in its price following the crash of the Japanese stock market and the adverse effects of regulatory pressures and macroeconomic factors. At the time of writing, BTC is trading at $57,333, marking a 13.09% decrease over the past seven days, according to CoinMarketCap.

While speaking on BTC's recent crash, Taleb compared the pioneer cryptocurrency to gold. The financial author suggested that gold was a superior store of value compared to Bitcoin. He illustrated this by noting that a piece of gold chain left on the ground for 10,000 years would still retain its intrinsic value, underscoring gold's enduring value and stability over time.

On the other hand, BTC, as a digital currency, lacks the tangible and relatively stable characteristics of gold. Taleb contends that the digital asset falls short of being a real currency, highlighting the cryptocurrency’s shortage of fundamental attributes that make gold a reserve of value.

BTC Dismissed As “Crazy Asset”

In further highlighting Bitcoin’s limitations as a hedge against market crash, Taleb went on to criticize the cryptocurrency’s fundamental nature as a digital currency. The financial author described the cryptocurrency as a “crazy asset,” highlighting that “crazy people” were driving its price up.

Emphasizing this, he stated that BTC was akin to a highly priced real estate in Manhattan used to attract the stock market. While he acknowledged that he has also invested in the cryptocurrency, the finance author also asserted that Bitcoin was “useless.” Taleb further clarified that it was not useful in an economic system to have an asset that surges from $10 to $60,000 when seeking price stability.

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