Excellent John K. Kumi is a cryptocurrency and fintech enthusiast, operations manager of a fintech platform, writer, researcher, and a huge fan of creative writing. With an Economics background, he finds much interest in the invisible factors that causes price change in anything measured with valuation. He has been in the crypto/blockchain space in the last five (5) years. He mostly watches football highlights and movies in his free time.
According to Bill Gates, the asset class is completely based on sentiments, and so cannot be trusted.
The crypto market in late last year reached about a $3 trillion market cap after recording an incredible adoption rate among retail and institutional investors. The crypto craze brought about the Non-Fungible Token (NFT) which was heavily patronized by celebrities worldwide. Regardless of the huge interest, Microsoft Corporation (NASDAQ: MSFT) founder Bill Gates is not that impressed with the underlying value of these digital assets as well as crypto. Speaking at the TechCrunch Sessions: Climate 2022 conference, he sarcastically took a dig at the Bored Ape Yacht Club NFTs, saying “Obviously, expensive digital images of monkeys are going to improve the world immensely.”
Speaking at the conference as a founder of Breakthrough Energy, he re-emphasized his position on cryptos. According to him, the asset class is completely based on sentiments, and so cannot be trusted.
“As an asset class, it’s 100% based on the greater fool theory – that somebody’s going to pay more for it than I do,” he said.
It is worth noting that the greater fool theory speaks about situations where people invest in overvalued assets while paying little attention to real underlying value. This is done with the expectation that someone will pay more for it. The danger of this theory is that the asset in question takes a serious nosedive once no one is left to pay a higher price.
Bill Gates earlier criticized crypto in a Reddit question-and-answer session in May.
“The value of crypto is just what some other person decides someone else will pay for it, so not adding to society like other investments,” he said.
The crypto market has been in a constant decline since late last year as investors are fleeing to less risky assets. Bitcoin, for instance, is down by more than 63% from its all-time high of $69,000. Also, various crypto exchange platforms have recorded a massive decrease in trading volume, forcing the likes of Coinbase Global Inc (NASDAQ: COIN) and Crypto.com to lay off employees.
The pullback has also affected the NFT industry as NFT Index, a platform that tracks the performance of eight popular NFT tokens, is down by 30% in the last seven days.
According to reports, an entry-level BAYC NFT fell to less than $100,000 for the first time since August 2021. It is said that the floor price is down by 78% since late April.
It is interesting to note that this moment is seen as the perfect entry point, explaining why the trading volume of the NFT marketplace OpenSea has been up by 173% in the last couple of days. However, Bill Gates emphatically declared his decision that he would not be part of it.
“I’m not involved in that. I’m not long or short,” he said.