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Bitcoin’s ability to bounce back from even the deepest sell-off is like South Park character Kenny’s comical ability to return to life after dying in each episode of the long-running cartoon series, according to Morgan Stanley’s Dennis Lynch.
Lynch, who heads up Morgan Stanley asset management subsidiary Counterpoint, was discussing bitcoin at Morningstar’s annual investment conference on Thursday.
“I like to say that bitcoin’s kind of like Kenny from South Park – he dies every episode, and is back again,” he said.
Bitcoin’s extreme volatility means it’s just as capable of rallying 10% in a day as it is of falling 10%. It’s seen a number of sell-offs this year, most recently at the start of this week, when it dropped by almost 9% in a day on Monday to its lowest in six weeks, as part of a broader market decline on the back of concerns about indebted Chinese property firm Evergrande.
But it’s since risen by about 14%, more than recouping those losses. In fact, bitcoin has fallen by 10% or more on a single day on at least six occasions this year, and every time, it’s bounced back.
Like Kenny of the Comedy Central franchise, bitcoin just keeps coming back, Lynch said.
“I think (bitcoin) demonstrates some ‘anti-fragile’ qualities during this period of time – anti-fragile being something that gains from disorder,” he said.
“It kind of sits in the portfolio in a small manner, that it is something that can go right when the rest of our portfolios have something going wrong,” he said.
Part of the boom in cryptocurrency demand this year has stemmed from ultra-low interest rates that have depressed the dollar and driven investors into riskier, higher-yielding assets.
“I can envision (bitcoin) benefiting from different environments, whether people look at it as a digital gold, or people start to really question (the) fiat currency, given all the stimulus and the policy there – (since) the Fed has had to be so accommodating,” Lynch said.