“If the longer term lies in blockchain transactions — and ether goes to be a greater lubricant of these blockchain transactions — you could possibly really argue that ether has a stronger upside story than bitcoin does,” Damodaran, a professor of finance at NYU’s Stern Faculty of Enterprise, advised CNBC’s “Street Signs Asia” on Thursday.
Ether is the cryptocurrency that runs on the Ethereum blockchain. It presently sits in second place behind bitcoin by way of market cap, in accordance with Coinmarketcap. Famous proponents of Ethereum embody billionaire investor Mark Cuban, who told CNBC previously that it “dwarfs” bitcoin.
Damodaran, a longtime skeptic of the cryptocurrency, stated bitcoin lacks an “endgame” and known as it a “purely speculative sport.”
“All that bitcoin bulls appear to speak about, their greatest gross sales pitch for bitcoin is: ‘Take a look at how a lot cash I’ve made on bitcoin.’ That is it, that is the top of the gross sales pitch,” he stated. “That is not a gross sales pitch. That tells me nothing concerning the substance right here.”
“I would not be shocked if bitcoin is up 20% tomorrow, down 25% the day after. This has grow to be a purely speculative sport,” stated Damodaran, who’s also referred to as Wall Road’s “dean of valuation.”
The professor’s feedback got here after a collapse in cryptocurrency prices Wednesday stateside.
Bitcoin plummeted 30% to about $30,000 at one point, however has since recovered partially and was buying and selling at $40,110.38 as of three:51 a.m. ET Thursday, in accordance with Coin Metrics. Ether was not spared within the fallout, briefly falling under $2,000 earlier than later making a partial restoration. It final traded at $2,724.61.
That wild journey was seemingly triggered by a slew of unfavourable headlines and catalysts, resembling tweets by Tesla CEO Elon Musk in addition to regulation by the Chinese government.
Damodaran additionally argued there’s a want for a separation in how every cryptocurrency is handled, provided that their supposed functions fluctuate.
“I feel we have to begin to separate the crypto house into: these cryptos which are attempting to be currencies, these cryptos which are attempting to be collectibles — millennial gold — and people cryptos which are really commodities,” Damodaran stated. “Proper now … we bundle them altogether on this as soon as house.”
The cryptocurrency sector at the moment spans a large gamut, from bitcoin which is commonly pitched as a potential competitor to gold as a retailer of worth, to others resembling Dogecoin — originally started as a joke. Each cryptocurrencies have seen wild swings of their worth thus far this 12 months due partially to their affiliation with Elon Musk.
In the meantime, crypto collectibles known as NFTs additionally grabbed headlines earlier this 12 months after individuals began paying thousands and thousands for them.