Steve Eisman, the prominent hedge fund manager and subject of Michael Lewis’ book “The Big Short,” has recently criticized the concept of Bitcoin as a currency on Bloomberg's Odd Lots podcast while also questioning its utility.
"Why is Bitcoin a currency?” Eisman asked. “It was like it was a given, but it’s not a given to me.” Eisman pointed out that the assumption that Bitcoin was a currency was frequently made by Bitcoin experts appearing on podcasts, without much discussion of the actual reasons why it should be considered a currency.
“The second part of the story about how should Bitcoin act they all had the same opinion, which was that government-issued fiat currency has been terribly debased because of all the deficits that all these countries have issued, but if you short the dollar, it's hard to short it. Therefore, you should buy Bitcoin as a hedge against the debasement of all currencies,” he said.However, Eisman stated that the idea that Bitcoin would behave as a hedge against the debasement of other currencies was problematic, as it had not actually performed in this manner. “The problem is it actually did the opposite. So what was the point?” he asked.
The largest cryptocurrency underperformed last year due to the U.S. Federal Reserve's hawkish monetary policy that was meant to combat inflation.
Eisman went on to argue that Bitcoin’s large price swings, often 25% or more within a six-month period, made it an unreliable currency. “You can’t have a currency that moves 25% every six months. What problem is this solving? Is there a problem with currency? It’s not even an issue. The currency markets are the most liquid markets in the world,” he said.
The "Big Short" star concluded by saying that he didn’t understand the purpose of owning Bitcoin, other than as a speculative investment. “I don’t understand what Bitcoin solves, and I don’t understand the purpose of owning it other than just another form of speculation. I just don’t get it,” he said.
Eisman’s comments on Bitcoin reflect a broader debate among financial experts regarding the utility of cryptocurrencies. Their potential and utility remain a contentious issue.