Due to the lack of fundamental economic factors in the formation of the value of the cryptocurrency, the price of bitcoin will fall to zero with a high probability. This is said by the leading economist of Vanguard Joe Davis for ETF. com.
He pointed out that the cryptocurrency can not have viable applications. So, it can not be perceived as a form of money, because it is not an effective means of accumulation.
The investment case for cryptocurrencies is weak. Unlike stocks and bonds, currencies generate no cash flows such as interest payments or dividends that can explain their prices. National currencies derive their prices from the underlying economic activity of the countries that issue them. Cryptocurrency prices, on the other hand, are generally not based on economic fundamentals. To date, their prices have depended more on speculation about their eventual adoption and use. The speculation creates volatility that, ironically, undermines their value as a currency.
The economist urged investors to refrain from investing in bitcoin.
As innovation quickens and competition increases, the majority of networks (and their associated cryptocurrencies) may be rendered obsolete, leaving many cryptocurrencies like tulip bulbs in 17th-century Holland—soaring to incredible heights before the speculative bubble pops. And, unlike tulips, they don’t look very nice in a vase.
At the same time, Davis noted that Vanguard, which manages assets worth $ 5.1B, is already using blocking technology and is very enthusiastic about it.