Charles Schwab’s chief investment strategist says she trusts the entire U.S. financial system, banking system, central bank and Federal Reserve power more than she trusts Bitcoin.
Charles Schwab’s strategist is skeptical of cryptocurrency
Liz Ann Sonders, Charles Schwab’s chief investment strategist, shared her thoughts on cryptocurrency and the US financial and banking systems in a webinar for Yahoo Finance last week.
The Wall Street strategist stated that she trusts the US financial system more than she does cryptocurrency miners, stating:
I still trust the entire US financial system, the banking system, all of its protective measures, as well as the power of the central bank, the Federal Reserve, to sort of control the fiat currency, which is also the global currency standard, and the reserve currency of the world – compared to Bitcoin miners.
Regarding cryptocurrency, she said, “I’m an admitted skeptic to some extent. I’m at either end of the spectrum, which means I’m a skeptic, but I’m not [saying] that’s complete nonsense. “
She explained that she has been asking a question for a long time, “What problem does this solve?” However, the strategist said, “I haven’t received a very convincing answer yet.”
Commenting on bitcoin’s use as an inflation hedge, she noted that the cryptocurrency has been around since 2009, but “the only inflation spike we’ve seen since that time was during a three-month period that bitcoin was cut in half. So you kind of lose that argument. “
The strategist continued to express concerns about the “concentration” of Bitcoin, which she views as a significant threat. “The latest data I’ve seen is that the top 2% of Bitcoin holders own between 90% and 95% of the Bitcoin. And then a lot of it is linked to leverage, ”she described. The strategist named “The Implosion of Melvin Capital with Gamestop” and “The Implosion of Archegos and stocks like CBS Viacom” as examples of what concentration problems could lead to.
Noting that crypto may have “underestimated” risk factors, she said:
I think this lever of leverage and focus can arguably pull its way through many of these areas where you’ve seen a tremendous amount of speculation.
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