Could bitcoin become the modern-day mullet haircut?
Something widely fashionable that quickly becomes dated and unpopular?
One prominent source says yes.
Last Thursday, Deutsche Bank analysts published a research note titled “Bitcoin: Trendy is the last stage before tacky,” quoting the late fashion icon Karl Lagerfeld.
“What’s true for glamour and style might also be true for bitcoin,” wrote Deutsche Bank’s Marion Labouré, also a Harvard professor, after the latest plunge.
“Just as a ‘fashion faux pas’ can happen suddenly, we just received the proof that digital currencies can also quickly become passé.”
The popular cryptocurrency has had a rocky ride in May, with last week accentuating the trouble.
Bitcoin value fell to three-month lows, dropping 30% to nearly $30,000 Wednesday, before jumping above $40,000 on Thursday.
By Monday it was at $37,853 around noon ET.
Laboure feels the cryptocurrency market has been exposed over the past three months.
“All it took for the cryptocurrency to fall out of style was one tweet and a Chinese government statement,” she wrote, adding later, “The value of bitcoin is entirely based on wishful thinking” and “bitcoin’s value will continue to rise and fall depending on what people believe it is worth.”
Tesla CEO Elon Musk tweeted May 12 that his company would no longer accept bitcoin as transactional currency, and a week later there was news that Chinese financial institutions were banned offering the cryptocurrency options – and couldn’t work with businesses that offered those services.
“It is clear that China’s targeted regulatory actions are designed to support the launch of its digital currency (CBDC),” Laboure wrote.
She also called the crypto’s dramatic rise the “Tinkerbell Effect,” given that the value depends on how much potential investors believe in it, rather than how much measurable value exists.