Steve Eisman, the money manager who earned celebrity status for correctly betting against subprime mortgages a decade ago, isn’t such a fan of the investing craze around cryptocurrencies.
Digital currencies like bitcoin have increased in popularity for only two reasons: speculation and money laundering, he said on stage at the CFA Institute’s annual conference here on Monday. Mr. Eisman, a managing director at Neuberger Berman, also questioned the reasoning behind why such currencies even exist.
“I don’t see the purpose of it,” he said on stage in front of roughly 1,500 attendees. “What value does cryptocurrency actually add? No one’s been able to answer that question for me.”
Mr. Eisman rose to fame when his prescient predictions about the 2008 financial crisis made him millions of dollars and earned him a lead role in author Michael Lewis’ bestseller about the crash, called “The Big Short.” The character based on Mr. Eisman was later played by actor Steve Carell in a 2015 movie based on the book.
Mr. Eisman now joins a growing chorus of prominent market participants, including Warren Buffett of Berkshire Hathaway and Jamie Dimon of J.P. Morgan Chase , who have been openly critical of digital currencies. Mr. Buffett said earlier this month that bitcoin is “probably rat poison squared’ and predicted that cryptocurrencies “almost certainly…will come to a bad ending.”
In a panel discussion and subsequent interview that ranged from current economic conditions to the moment he knew the U.S. housing market would collapse—May 8, 2006, when Wachovia Corp. made a $26 billion bet on the mortgage market—Mr. Eisman said he has never bought or sold any cryptocurrencies.
“I don’t touch it,” he said. “I don’t know what I’m looking at…I have no interest”
During his presentation, Eisman stated that the reasons why Bitcoin and other cryptocurrencies had gained popularity were two fold. Firstly, they were a tool for people to speculate with. Secondly, that money launderers were using them to clean cash. For the Neuberger Berman managing director, these were the only reasons why anybody was even interested in the financial innovation.
He continued, questioning the rationale behind digital currencies existence in the first place:
“I don’t see the purpose of it… What value does cryptocurrency actually add? No one’s been able to answer that question for me.”
Eisman was speaking at an annual conference for the CFA Institute – a global association of investment professionals. He addressed a crowd of around 1,500 on a panel discussion in which he stated clearly that his expertise lay outside of cryptocurrencies so he hadn’t ever invested in them:
“I don’t touch it… I don’t know what I’m looking at…I have no interest”
He also stated that he had no desire to trade traditional currencies and questioned the lack of regulation in place governing cryptocurrency investors and traders:
“I don’t understand why regulators haven’t regulated it more heavily.”
Eisman initially found fame after correctly predicting the 2008 financial crisis. He was subsequently immortalised in a bestselling book by author Michael Lewis, ‘The Big Short,’ which was then turned into a movie of the same title. Actor Steve Carell played the role of Eisman. According to the man himself, Carell’s portrayal was very accurate, despite him having little to do with the making of the film.
During the panel discussion at the CFA Institute conference and an interview that followed, Eisman also addressed the current economy, the likelihood of a similar crash today, and how he knew that the U.S. housing market would tumble so spectacularly around a decade ago.
With Eisman’s outlook on cryptocurrencies, he joins a chorus of voices that includes Charlie Munger, Warren Buffet, Jamie Dimon, and various other names associated with traditional banking and financial institutions.