Crypto’s Focus on New Investor Inflows Risks Making It Look Like a Ponzi Scheme, Balchunas Says

The cryptocurrency industry risks looking like a Ponzi scheme if it continues to market itself primarily around attracting institutions and new investors, Bloomberg ETF senior analyst Eric Balchunas said.

In an interview with CoinDesk published on June 2, Balchunas said he is concerned about the industry’s current messaging and argued that its value proposition needs a fundamental overhaul.

He described messaging strategy as the only aspect of the current market that gives him pause. The industry, he said, has a problem it needs to solve on its own and should not simply push the idea that baby boomers and other traditional-finance wealth holders are now piling in.

That approach is risky because it can easily be mistaken for a Ponzi-like structure, he said. It can leave the impression that returns for existing investors depend on finding the next wave of buyers.

“No matter who becomes president of the United States, the government is going to keep printing money like crazy,” he said. “If you want a powerful hedge against an asset the government can arbitrarily debase, Bitcoin should be the core message because it is the strongest asset for that purpose.”