3 Investing Legends On Bitcoin

Jim Rogers, Kevin O'Leary and Dennis Gartman share their views on the controversial digital currency.

sumit
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Senior ETF Analyst
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Reviewed by: Sumit Roy
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Edited by: Sumit Roy

The rise of bitcoin has been one of the biggest stories in financial markets this year. Up 150% year-to-date, the sudden surge in prices for bitcoin has surprised even its most ardent proponents, while catapulting digital currencies into mainstream consciousness for the first time.

Bitcoin's rapid ascent has brought with it a spectrum of opinions about whether this asset is the real deal. Is bitcoin here to stay, or is it a bubble ready to burst? To answer that question, ETF.com asked three investing legends for their take on this controversial topic.

Jim Rogers is a famous author, investor and businessman. He's well-known for co-founding the Quantum Fund and creating the Rogers International Commodity Index.

Kevin  O'Leary is an entrepreneur who sold his software company for more than $4 billion. Today he's known as Mr. Wonderful on the hit TV show "Shark Tank" and as chairman of O'Shares Investments.

Dennis Gartman is the man behind The Gartman Letter, a daily newsletter discussing global capital markets that's been popular with traders and investors for more than 20 years. 

 

Jim Rogers

I'm not an expert on the subject, but I know there are several cybercurrencies developing. I do know the world has a big money problem facing us. I do know that in the past few decades, nearly everything we know has been changed and problems are being solved by the internet―and money will be, too.

Our new system of money, whatever it is, is going to be something on the internet. Whether it’s bitcoin or not, I don't know. I’m not smart enough or knowledgeable enough to know.

I do know that, for instance, IBM did not invent the computer. But the people who did invent it, you haven’t heard of. So who knows who will wind up being on top with cybercurrencies?

 

Kevin O' Leary

My concern about cryptocurrencies is the fact that they can be used in an unregulated format. The speculation is that a lot of the ransomware episodes were driven by the availability of these currencies.

That's always going to keep them out of the mainstream and hold them back. For example, the attempt to create an ETF around bitcoin failed because the regulators didn't see it as something they thought had the merit to be invested institutionally.

It's also extremely hard to short bitcoin. Therefore, how do I know there's been a full price discovery on its value if nobody can take the other side of the trade?

I would prefer, at the very least, that there be an instrument by which I could short bitcoin, because I think you'd find a lot of people would like to be on the other side of the trade. Once all that price discovery came into it, along with more liquidity, it would be safer.

I look at it as another currency—and I do own multiple currencies in my portfolio—but I've always refused to take on the volatility of a bitcoin because I don't know if it's really got true price discovery.

 

Dennis Gartman

I love to talk about bitcoin. The only people who believe in it are the millennials. I understand that; they've grown up with this notion of bitcoin. But I find bitcoin to be one of the most ludicrous ideas I’ve ever come across.

Don't get me wrong; the idea behind it―the blockchain technology behind it―is bloody brilliant. The block chain methodology will change the manner in which we trade stocks, bonds, currencies and gold for years into the future. It will change the manner in which trading takes place.

But does bitcoin have any rationality behind it whatsoever? The answer, in my opinion, is no. It’s comically overpriced, comically close to a bubble, and we've seen bitcoin's high. I don't think there's any question that a month and a half ago we saw the high made in bitcoin.

What's amusing to me is that the believers in bitcoin say there's a fixed and finite supply that cannot be increased. Sure, maybe bitcoin supply can't be increased, but there are now over 100 other cryptocurrencies, which effectively increases the supply of cryptocurrencies.

And quite honestly, if you really think that bitcoin, once its last bit has been mined, is not going to reopen for further increases in supply, you're naïve; of course it will.

So has bitcoin supplanted gold at the margin? No question. For the millennials, bitcoin makes sense to them. Gold seems senseless; they don't get it. But the bubble has burst in the bitcoin phenomenon.

Contact Sumit Roy at [email protected]

 

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.