On Wednesday evening, we brought you Jeremy Grantham’s latest letter, which purports to explain why, despite valuations that are stretched to historical extremes, stocks are set to rally further. It’s the fabled “blow-off top” – the “melt-up” phase.
The market junkies among you likely read or at least skimmed the entire letter, but we’re going to go out on a limb and say that our crypto readership didn’t bother to even click on the post because in all likelihood, they don’t have the first clue as to who Jeremy Grantham is.
For those folks, suffice to say he’s like Ron Burgundy – “kind of a big deal.” Given that, we wanted to highlight his comments on Bitcoin.
If you word-search the letter, Bitcoin comes up just 5 times, but when it does, he suggests that in contrast to equities, the crypto space reached true bubble territory a long time ago. To wit:
Bitcoin dwarfs even the legendary South Sea Bubble! Having no clear fundamental value and largely unregulated markets, coupled with a storyline conducive to delusions of grandeur, makes this more than anything we can find in the history books the very essence of a bubble. Historical analogy suggests this junior bubble, by size, may well crash and burn even before the broad market peaks.
Got that? It’s pretty unequivocal. Here’s the accompanying chart:
As for anecdotal evidence to support his contention, Grantham leans on the same the type of stories detailed in a recent Wall Street Journal piece that documented the extent to which literal grandmothers are now trading Bitcoin while playing poker in Vegas:
This is a true, crazy mini-bubble of its own I expect — it has certainly passed my “nephew test” of his obsessing about buying or not.
There you go – when Jeremy’s nephew wakes up with Bitcoin on the brain, you know we’re all doomed.
In the era of information, access to expert opinions, charts, data, historical perspective the mind chooses to believe an alternate reality. Cryptocurrencies investors think of Galileo and other misunderstood great minds who saw the truth well ahead of the masses. Young, old and in between hope against hope that this is not a mirage but a great historical event. The mind is a fragile thing. I’d like to know where the insidious narrative came from and who spread it to the masses knowing full well that it would fire up the imagination of many. I want to know who started the the fire and who continued to stoke the flames to the levels we are observing now….I really want to know. There has been some seriously irresponsible writing and highly flawed fact-sharing on the topic.