The Wall Street Journal has unleashed its harshest criticism of bitcoin to date, intensifying its negative coverage of the cryptocurrency. The Journal declared, “bitcoin is a completely speculative and momentum-driven asset” in a news article published June 22, after the digital currency lost well over half its value during a two-month period, dropping below $30,000. In April it traded as high as $65,000.
Nationwide Coin and Bullion Reserve has pointed out in this blog that cybercurrencies are not backed by any hard asset: their value relies entirely on buyers believing they are purchasing something of worth, a fact that The Wall Street Journal confirms.
“Everyone in cryptoland is trying to convince each other that this is the bottom,” the Journal reported. “But without fundamentals for investors to latch onto, it is impossible to determine what a fair value is for bitcoin.”
Bitcoin’s extreme volatility itself is perhaps the greatest argument against those who claim it is a viable store of value that could replace gold. What reliable store of value loses more than half its value in less than two months’ time?
In contrast, gold has been a universally trusted and respected store of value for millennia. It is the ultimate hard asset and has unmatched liquidity: more than $180 billion worth of gold is traded around the globe each day. Gold can always be converted to cash.
Precious metals investors wondering why there is so much buzz surrounding bitcoin and other digital currencies need only consider the fact that the news media and social media both love dramatic stories about investments that soar in price only to plummet, making get-rich-quick speculators seem like suckers.