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In a must read investor letter, Howard Marks, co-chairman of Oaktree Capital highlights the fact he is not a fan of cryptocurrencies! "In my view, digital currencies are nothing but an unfounded fad (or perhaps even a pyramid scheme), based on a willingness to ascribe value to something that has little or non beyond what people will pay for it. But this isn't the first time. The same description can be applied to the Tulip mania that peaked in 1637, the South Sea Bubble (1720) and the Internet Bubble (1999-2000)."
Questioning whether bitcoin's use for payments qualifies it as money, Marks goes on to raise doubt about the market's prospects should the prevailing optimism among speculators start to diminish. "What will happen to bitcoin's price and liquidity in a crisis if people decide they'd rather hold dollars (or gold)?" he asked. Later, Marks places the recent developments around cryptocurrencies in the wider context of the international market, including historically low yields on bonds and "some of the highest equity valuations in history". He goes on to state that he's not saying that "digital currencies are sure to end up worthless" or that stock prices are too high today – rather, that the market today, in his view, is in a precarious state. "Not a nonsensical bubble – just high and therefore risky," he notes.
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