Bitcoin’s epic rise, has added fuel the debate over the cryptocurrency. JPMorgan & Chase (NYSE:JPM) CEO Jamie Dimon called the speculative mania over bitcoin “worse than tulip bulbs,” referring to the speculation that preceded the drop of tulip bulb prices in the 1630s. Although Niall Ferguson, historian and author of ‘The Ascent of Money,’ has concerns over bitcoin, he responded to Dimon’s comments, telling FOX Business’ Maria Bartiromo on “Mornings with Maria,” “It’s not tulip mania, sorry Jamie Dimon, that is not the right analogy.”
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Fergusson does think bitcoin is in bubble territory.
“It looks a lot like a classic bubble, in fact it’s one of the biggest bubbles in financial history.”
But, Ferguson says he has a theory that is holding him back from potentially shorting bitcoin.
“There is one little snag to this argument and the reason I’m not, you know, desperately shorting bitcoin, and that’s the possibility that bitcoins become digital gold for the world’s millionaires.”
According to Fergusson , if the theory were true Bitcoin could soar even more.
“I have this horrible calculation and it’s been haunting me. If they just put 1% of their assets into bitcoin than the right price should be $60,000, not $16,000 or $17,000, so I’m not quite ready to say the bubble’s going to burst.”
Ferguson’s theory has some potential support from early ‘bitcoin billionaires’ Tyler Winklevoss and Cameron Winklevoss who suggested on Monday’s “Mornings with Maria” that “bitcoin is gold 2.0.”
“We think it’s definitely realistic that it could grow and disrupt gold and maybe even beyond that,” Cameron Winklevoss said.
Fergusson says bitcoin is becoming a popular investment in emerging markets.
“If you travel the world and talk to people, especially outside the United States in emerging markets where there’s less security of property rights, where rule of law’s shakier, there’s a lot of attraction in holding some of your wealth in bitcoin.”
Fox Business’ Dagen McDowell then weighed in on the rising interest among retail investors even in the U.S. “A friend of mine said, every bar I go into the bartender wants to talk about bitcoin.”
Ferguson suggested that stories such as this are additional signs that bitcoin is in bubble territory.
“The latecomers are the people who only read about it a few weeks ago and that’s the sure sign that the bubble is reaching its final phase when the outsiders, the newcomers, the neophytes pile in and they’re the ones that are going to get stung when this correction comes as it surely will.”