- Former FDIC chair Sheila Bair said she does not have confidence in bitcoin despite an increasing number of institutions embracing the cryptocurrency.
- Bair was a key banking regulator during the height of the global financial crisis in 2008.
- “Stay away from it,” she said in an interview with Bloomberg. “It’s volatile. It’s at nosebleed levels now.”
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Former Federal Deposit Insurance Corporation chair Sheila Bair warned investors of getting into bitcoin at its current record-high price. Bair, a key banking regulator during the height of the global financial crisis in 2008, said she does not have confidence in the cryptocurrency.
“Stay away from it,” she said on Wednesday in an interview with Bloomberg. “It’s volatile. It’s at nosebleed levels now. We don’t know how sustainable that is.”
Bair’s comments came before two big announcements on Thursday, as Mastercard announced it will allow merchants to accept select cryptocurrencies on Thursday and Bank of New York Mellon said that it will issue, hold, and transfer bitcoin for clients in the future.
The news of further participation from large institutions send the price of bitcoin soaring to an intraday record of $48,364.06.
“If you’re a very wealthy person with some money to risk, fine,” she added. “The problem with bitcoin is it is so volatile. So its original premise as a method of payment really, its volatility gets in the way of its usefulness.”
Bair did add that what she is more interested in is the “technology that underpins Bitcoin.” She is currently a board member of Paxos, a New York-based fintech company that specializes in blockchain, and Spring Labs, a tech company focused on building a blockchain-based network.
“Yes, [bitcoin] has risks but where there are risks, there are definitely also opportunities,” Julius de Kempenaer, senior technical analyst at StockCharts told Insider. “But for those who know what they are doing, have proper risk management in place, can handle the stress, and can afford the potential losses – give it a go.”
Others voice concern about bitcoin’s decentralized nature and lack of oversight.
“The price of bitcoin is like a meme, it gets everyone excited,” said Mike Venuto, co-portfolio manager of the Amplify Transformational Data Sharing ETF, an approximately $391 million ETF that focuses on blockchain technologies and companies dealing with cryptocurrencies.
“This excitement obscures the reality of the original bitcoin thesis of decentralization, replacing the trusted third party and banking the unbanked,” he said. “The focus now seems to be the store of value argument from the limited supply.”
The portfolio manager added that while the adoption of bitcoin as a store of value and as a means of the transaction has reignited interest in cryptocurrencies especially because of Elon Musk, he still doubts “we will ever buy coffee with bitcoin.”