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Former Wells Fargo CEO Calls Bitcoin A Pyramid Scheme

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Former Wells Fargo CEO Calls Bitcoin A Pyramid Scheme
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JPMorgan Chase & Co. (NYSE: JPM) CEO Jamie Dimon went called bitcoin a "fraud" last year, although he did change his tune on the digital currency. Now former Wells Fargo & Co (NYSE: WFC) CEO Richard Kovacevich has found a new way to describe bitcoin: a pyramid scheme.

What You Need To Know

Bitcoin is not only a "pyramid scheme," but it "makes no sense," Kovacevich told CNBC in a Tuesday interview. But to call bitcoin a fraud would be an error, he said, since "everyone knows what is going on" and nothing fraudulent is occurring. Bitcoin, in Kovacevich's view, is merely a "pyramid scheme" because bitcoin investors are, at the core, "betting that someone is going to buy it" at a higher price.

Why It's Important

Many early investors in bitcoin were on the right side of the trade by buying it early, Kovacevich said. Bitcoin's fundamentals make no sense, he said.  And the cryptocurrency "won't have any effect" on equities, the ex-CEO said. 

What's Next?

Bitcoin's outlook remains as uncertain Tuesday as it has any other day. Kovacevich's comments would seem to imply that he thinks the price of bitcoin is set for a tumble. Other market watchers, such as Saxo Bank analyst Kay Van-Peterson, have said bitcoin has a clear path to trade between $50,000 and $100,000 in 2018.

Related Links:

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Posted-In: Bitcoin CNBC Jamie Dimon Richard KovacevichCryptocurrency Media Best of Benzinga

 

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