While hedge funds seem to be funneling into the cryptocurrency ecosystem at a steady and increasing rate, investment management powerhouse Vanguard Group won’t be joining the trend. Vanguard CEO Tim Buckley is saying “never” to any Vanguard investments into bitcoin.
Vanguard CEO: “Never”
In new comments on Monday, January 22nd, Vanguard’s top executive Tim Buckley — who currently manages nearly $5 trillion USD in assets — clarified his firm wouldn’t be entering the “Bitcoin Boom,” now or ever:
“You will never see a fund from Vanguard on bitcoin. We tend to stay away from assets that don’t have underlying economic value. They don’t generate earnings or cash flows.”
“[…] The bitcoin – its value is based off of scarcity – and an artificial scarcity that’s out there. It’s really tough to imagine where the long-term return comes from other than speculation.”
To Buckley and Vanguard’s credit, though, at least they’re consistent. That’s because Vanguard also famously avoids investing in gold for the same reasons. Like bitcoin, the so-called “digital gold,” the firm sees the precious metal as entirely speculative and entirely devoid of underlying economic value.
Right or egregiously wrong, the “bitcoin has no underlying value” narrative has been a predominant theme in mainstream punditry since the start of 2018.
Take Nobel Prize-winning economist Paul Krugman’s recent tweetstorm, for example. In a long Twitter thread, Krugman argued that “[i]f people come to believe that Bitcoin is worthless, well, it’s worthless. Its price rise has been driven purely by speculation.”
Bitcoin Really a “True Complement” to Gold?
Buckley and Krugman might not be big fans of gold or digital gold, but Jan van Eck — CEO of Van Eck Associates — sees the situation quite differently.
Indeed, van Eck’s view is the polar opposite. In a new interview, he noted his firm likes bitcoin so much because — somewhat suprisingly — its familiarity.
“Once we started thinking about it, we do have expertise in commodities and precious metals. We said, you know what, this is a complement to gold. It’s a true complement to gold.”
Contrasting Jan van Eck’s comments here with Buckley’s earlier comments, then, you can see two general trends that are going to define how traditional financial types will approach the ever-growing crypto craze for the foreseeable future.
Some, like Buckley, won’t ever come around. Others, like van Eck, have already been bowled over by the potential. This “glass half full, glass half empty” dynamic isn’t going anywhere any time soon.
What’s your take? Do you think Buckley is missing out on a huge opportunity? Let us know in the comments below.
Images via pionline, LinkedIn