Key Takeaways:
- Nassim Nicholas Taleb argues Bitcoin’s sharp decline on August 5th shows it fails as a hedge against market crashes.
- On that day, the entire cryptocurrency market lost $510 billion in market capitalization, with Bitcoin falling around 18%.
- Taleb compares Bitcoin to speculative assets and not a reliable store of value like gold, citing the impact of the Bank of Japan’s interest rate hike.
Nassim Nicholas Taleb, author of The Black Swan, argued on CNBC’s Squawk Box that Bitcoin’s sharp decline on August 5th demonstrates its failure as a hedge against market crashes.
On that day, the entire cryptocurrency market lost $510 billion in market capitalization, with over 60% of the top 50 cryptocurrencies erasing their 2024 gains.
"The Black Swan" author @NNTaleb claims bitcoin is "a speculative thing."
— Squawk Box (@SquawkCNBC) August 6, 2024
"Bitcoin proved once again that it's not a hedge against your assets melting," he argues, following the latest market sell-off. pic.twitter.com/niRfei1BAC
Bitcoin’s drop was notably severe, falling around 18%, compared to the S&P 500’s 5% decline and Japan’s Nikkei’s 12% drop.
Taleb likened Bitcoin to speculative assets, suggesting it behaves like high-priced Manhattan real estate and is not a reliable store of value like gold.
The recent crash was triggered by the Bank of Japan’s interest rate hike, which increased costs for foreign borrowers with yen-denominated debt, severely impacting the crypto market, which had borrowed heavily to finance leveraged trades.
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Efe Bravo, a seasoned journalist, delivers compelling insights into the cryptocurrency and blockchain industry.
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