Steve Eisman of ‘The Big Short’ Bashes Cryptocurrency: ‘I Don’t See the Purpose of It’ - WSJ
He rose to fame off the bat of his predictions about the 2008 financial crisis
Steve Eisman, managing director of Neuberger Berman, during an interview in New York last year. Mr. Eisman on Monday threw cold water on the cryptocurrency frenzy. PHOTO: CHRISTOPHER GOODNEY/BLOOMBERG NEWS
By Steven Russolillo
HONG KONG—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.
Actor Steve Carell as Mr. Eisman in a scene from the 2015 film ‘The Big Short.’ PHOTO: JAAP BUITENDIJK/PARAMOUNT PICTURES/ASSOCIATED PRESS
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”
He emphasized that he isn’t an expert on the subject and never invests in traditional currency markets, let alone cryptocurrencies. He also wondered why governments haven’t put proper investor controls in place to protect cryptocurrency investors.
“I don’t understand why regulators haven’t regulated it more heavily,” he said.
A man uses a bitcoin ATM in Hong Kong on Friday. Mr. Eisman questioned why regulators haven’t been firmer on digital currencies. PHOTO: KIN CHEUNG/ASSOCIATED PRESS
Bitcoin recently traded at around $8,400, according to Coindesk. Its price was at around $1,000 at the beginning of last year and surged to nearly $20,000 in December before falling back.
“I see risks but I don’t see systemic risks,” he said.
One of his chief concerns lands far, indeed, from the crypto market: Canadian property.
“There’s a housing bubble in Canada which is starting to break,” he said, adding that he’s shorting, or betting against, seven publicly-traded Canadian financial stocks.
Mr. Eisman, who said he has 8,000 comic books on his iPad, also stressed that he had almost no involvement in the making of “The Big Short” movie— though he did meet for breakfast once with Mr. Carell,and saw him twice on set.
“People who have known me a long time have all said the same thing,” he added. “He got me right.”