‘Bubble’ Bitcoin ‘Fair Value’ is $100, Fumes Japan Post Bank CIO

Journalist:
November 17, 2017

Katsunori Sago, the chief investment officer at Japan Post Bank, has joined the cadre of financial observers calling bitcoin a bubble, stating that bitcoin’s fair value should be around $100.

The banker went on to call the bitcoin bubble worse than the 1990s dot-com bubble.

Sago said the bank could consider buying bitcoin if it falls to $100, but it has no plans to short sell bitcoin on account of its volatility, in remarks reported by Reuters yesterday. Today, bitcoin price hit a new all-time high of $8,040.

Worse Than Dot-Com Bubble

Sago said there was a rally in dot-com shares in the 1990s, but people then were at least using the services of dot-com players like Yahoo and Rakuten, a Japanese Internet company.

Today, people he knows are “doing crypto-currency businesses,” but no one he knows is trading cryptocurrencies or using them in real life. In that sense, he said bitcoin is worse than the IT bubble.

Sago said one friend with no financial industry background recently asked his opinion on cryptocurrencies. The fact that people with no financial background ask such a question indicates the market is headed for trouble in a few months. He said he had similar experiences before the dot-com bubble burst in 2000 and before the peak in stock prices in 2007.

Bitcoin Could Hit $10,000

Bitcoin’s price could hit $10,000 before the CME Group launches bitcoin futures before the end of the year, Sago said. But he said it is hard to predict when the bubble will burst. Hence, the bank does not want to short bitcoin.

Blockchain is a great technology, he said, and bitcoin could eventually become a major settlement tool. But that could be more than a decade away.

Also read: Bitcoin is ‘by definition speculative’, says Morgan Stanley CEO

Financial Observers Pile On

Morgan Stanley chairman and CEO James Gorman also recently claimed that bitcoin “doesn’t quite deserve the attention it is getting” at a time when the cryptocurrency is nearing all-time highs.

Sago and Gorman join a cadre of other bankers and financial figures who have been asked about bitcoin in a year where the cryptocurrency has firmly permeated into the mainstream and society as a store of value among retail investors.

Earlier this month, Societe Generale deputy CEO Severin Cabannes said bitcoin is clearly in a bubble, while Credit Suisse CEO Tidjane Thiam stated bitcoin is “the very definition of a bubble.”

Asked about bitcoin’s price gains this year, legendary investor Warren Buffet said there’s a “real bubble in that sort of thing.” The most infamous quote of all is left to JP Morgan Chase CEO Jamie Dimon, who said bitcoin is a fraud.

Featured image from Shutterstock.

Tags: James Gorman
Lester Coleman

Lester Coleman is a media relations consultant for the payments and automated retailing industries.