David Stockman warns that Bitcoin will crash spectacularly

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David Stockman, President Ronald Reagan’s former director of the Office of Management and a relentless Wall Street bear, is warning investors that the cryptocurrency boom will end disastrously.

David told CNBC’s “Futures Now” last week:

“It’s basically a class of really stupid speculators who have convinced themselves that trees grow to the sky. It will burn out in a spectacular crash. All of these latter-day speculators will have their hands burned to a crisp, and they will learn the proper lesson.”

However, his view does not concern Bitcoin exclusively as it extends to the stocks market too. In September, he told investors that we are likely to see a 40-70% correction not too far down the road. On Friday, the Dow Jones Industrial Average flirted with 25,000, with the S&P trading just shy of a new record.

David believes that the Federal Reserve and the central banks are to blame for the hype that is currently surrounding both the stock and the cryptocurrency markets. He believes that too much liquidity is pumped into the marketplace in order to compensate for the 2008 financial crisis.

“What we really need to do is not think these are regulator problems, but understand they’re monetary problems. It’s an irrational, overheated market like never before.”

Despite Bitcoin soaring more than 3,000% in the past two years, David argues that one cannot put a price tag even on the big cryptocurrencies, such as Bitcoin, Ethereum or Litecoin.

“I have no idea. I mean it could double or triple from here or it could fall to zero. But the point is that it’s not real money because real money for transactions has to be stable.”

Even though Bitcoin Futures contracts have been added by CBOE and CME, David believes that this does not make this emerging asset class any more legitimate.

“Anytime Wall Street sees an opportunity to shear the sheep, and they see the sheep stampeding to the slaughter, they line up with some new gimmick to take advantage of the circumstances. That’s all. There is nothing that’s being validated by the opening up of a futures market. It’s just everybody trying to get on the train for the ride.”

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