By Stephen McBride
The price of Bitcoin has risen by 210% since March to over $2,900… and one of the world’s most successful investment strategists is warning investors to stay away.
Speaking at the Mauldin Economics’ Strategic Investment Conference, Raoul Pal—author and publisher of The Global Macro Investor, an elite macroeconomic and investment research service—said Bitcoin’s explosion upward is mania.
Bitcoin Is a Bubble
“The explosion [in the price of Bitcoin] is mania. It’s people looking for a rate of return. It’s in the bubble phase. [Bitcoin] goes through this periodically… it rises several hundred percent, and then collapses.”
In December 2013, Bitcoin ran up to over $900 and subsequently collapsed to below $250… it would take three years for the price to again reach those highs.
Source: Coin Desk
Exponential Moves Always Blow Up
Pal, speaking in an exclusive interview with Mauldin Economics, made ten-times his money on Bitcoin and thinks now is a good time to get out.
“This is the most exponential move we have seen. I don’t know how far it goes, but I sold out last week… and I’ve [owned Bitcoin] since it was $200. Anything that moves exponentially, always [blows up].”
However, Bitcoin’s meteoric rise isn’t the only reason The Global Macro Investor exited his position.
Only 21 Million Bitcoins? Not necessarily.
“Bitcoin was supposed to be a store of value, you couldn’t mess with the formula… and now they are talking about a ‘hard fork’ changing it?”
A feature that has attracted many investors to Bitcoin is its built-in scarcity. It’s widely thought that only 21-million Bitcoins can ever be ‘mined’ into existence.
However, senior developers and miners are now contemplating a ‘hard fork’ which would split Bitcoin in-two and allow for the creation of more Bitcoins.
“Even if they don’t change the formula, the fact that they could? That’s enough to say it’s not a long-term store of value.”
Pal says a recent development in India also changed his views on the crypto-currency.
Could “India Stack” Replace Bitcoin?
“India introduced a frictionless payment system, [something] that everyone in Bitcoin was working on… this was [Bitcoin’s] great project and India went and did it for 1.1 billion people, fifty-times faster than Bitcoin and its rolled out and working now.”
Pal is talking about “India Stack,” which will soon process more transactions than Bitcoin ever has.
India Stack allows users to open a bank account, mobile phone account, or share medical records at any hospital or clinic in India with your fingerprints or by retina scan.
In the March edition of The Global Macro Investor, Pal said of India Stack:
“This revolutionary digital infrastructure will soon be able to process billions more transactions than Bitcoin ever has. It may well be a Bitcoin killer or at best, provide the framework for how blockchain technology could be applied in the real world.”
What About Blockchain and the Future of Finance?
For Raoul Pal’s thoughts on the technology behind Bitcoin, the financial system, cashless societies, and more, watch the full interview below.
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