Andy Xie, Morgan Stanley’s former chief Asia-Pacific economist, says that Bitcoin will never replace fiat currency due to its “huge volatility.”
Xie, who is famous for predicting the 1997 Asian financial crisis, tells the Korea Times that he believes Bitcoin is a “gambling instrument” for people living in Japan, South Korea and China.
Says Xie,
“Cryptocurrency will never be recognized as legal currency because the governments cannot issue bonds in that. Its volatility could bankrupt such a government.”
He’s not the only economist to hold that opinion. Xu Xiao Chun, an economist at Moody’s Analytics, tells the Korea Times that Bitcoin fails as a store of value.
Says Chun,
“Although cryptocurrency has captured the world’s imagination, it has remained too volatile to be taken seriously as a form of money as it violates the rule of store of value.”
Other noted economists, however, disagree. Mauro F. Guillen, a political economist and professor at the Wharton School, thinks crypto has a future.
Says Guillen,
“Bitcoin is staging a comeback because there is an opening now. Facebook’s announcement has made it clearer that there is a crypto future, even if regulators raise concerns. Also, near-zero interest rates make them more attractive as assets.”
Xie, however, believes Wall Street traders won’t allow Bitcoin to surpass its historical 2018 high.
“Wall Street has set up a futures market in Chicago. The traders there could push it back when it is that high. They would push it down until the people in East Asia panic and run. Then they will square position to cash out…
They are essentially making money from East Asia. They will make it in such a way to keep the game going. East Asians lose about $100 billion in gambling every year.
Cryptos are taking over the business. Eventually, you will see physical casinos closing down.”
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