Billionaire Investor Warns Bitcoin is Pyramid Scheme

Howard Marks, the man who predicted the dotcom bubble, billionaire investor, co-chairman of Oaktree Capital Group, has called Bitcoin a fad and even a pyramid scheme.

It is a strong voice in opposition of the digital currency with Marks’ company, Oaktree Capital, dealing with $99 bln of assets under management to date.

Just another bubble

In an investor letter sent out on Wednesday Marks warned his clients against the draw of Bitcoin, linking it to a host of other big bubbles that have come before.

Marks said:

“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 none beyond what people will pay for it.”

Cryptocurrencies have drawn in some big names recently, including Rothschild Investment Corp. and other bug hedge and investment funds. The growth of Ethereum is up more than 2,300 percent year to date, while Bitcoin is up nearly 160 percent this year; the sort of numbers that are hard to ignore for investors.

Seen it all before

Marks is famous for his investor memos, ones that have seen him predict the recent financial crisis and the dotcom bubble implosion.

Marks added in his memo the similarities between the cryptocurrency boom and the likes of the Tulip mania of 1637, the South Sea bubble of 1720 and the Internet bubble of 1999.

“Serious investing consists of buying things because the price is attractive relative to intrinsic value,” he wrote. “Speculation, on the other hand, occurs when people buy something without any consideration of its underlying value or the appropriateness of its price.”

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Source: Cointelegraph