I suppose it’s only fitting that Janet Yellen would weigh in on Bitcoin at her final press conference as Fed Chair.
Central banks the world over are scrambling to figure out what to make of something the crypto crowd has variously suggested is a substitute for the trillions in paper money rolling off the government printing presses. As I noted in a new piece out this afternoon for DealBreaker, “there’s still a sizable contingent of crypto crazies who insist their love for make-believe space tokens is at least partly attributable to an inherent disdain for central bank profligacy.”
Asked about Bitcoin by CNBC’s Steve Liesman on Wednesday, Yellen said she “certainly agrees” it’s important for the Fed to understand emerging risks to financial stability but argued that Bitcoin risks look “limited.” For the time being, she added, there doesn’t appear to be significant exposure for financial institutions. Of course the introduction of futures could change that.
Yellen also called Bitcoin “highly speculative”, “not a stable store of value” and opined that it doesn’t constitute legal tender. Here’s the video:
There you go.
The cruel irony there for the crypto crowd is that eventually, central banks will simply co-opt the technology, create government-controlled digital currencies, and either regulate the “competitors” so heavily as to render them useless or make them illegal by decree.
Of course that’s not Janet Yellen’s problem now. She’ll get to watch the drama unfold from the sidelines.
Oh, and in case you forgot, below we’ve reprinted the letter from Thomas Peterffy to the CFTC explaining how Bitcoin could indeed become a systemic risk that will ultimately need to be subject to stricter oversight…
That letter is very sensible. Clearly, it was written by someone who has lived through margin call cascsdes. Yellen had a plain vanilla prepared response. She at least could have said “irrational exuberance” especially given the backdrop of perspectives that never ponder important metaphysical propositions.
Heisy, I think Bitcoin speculators are waiting for the new year to book gains. I myself face this issue, on a very small scale. My guess is we see a significant sell-off right before year-end that could turn into a rout come the new year. Hot potatoes indeed. I’ve decided to hold long term though.
Rudy
well I think this is less of a no-brainer for people with smaller positions and for people with giant positions than it is for the people in between.
if you have a tiny position that’s worth maybe $30K, I could see wanting to stick around to make another $30K.
with giant positions, if you’re up $50 million and you are a dedicated crypto maniac who thinks this is going to change the future, well then I could understand wanting to stick around and see if your thesis plays out.
what I cannot understand, is why anyone in the middle would stick around. that is, if you became a small-time millionaire in this and are sitting on $ 3 million bucks (or something like that) that you didn’t have two years ago and that in all likelihood you will never be able to make again if it collapses, just get the hell out now. cash out a millionaire. you’re never going to be a billionaire anyway, so why not retire tomorrow?
but again, for the small time holders and the mammoths, the calculus is different.