Is Bitcoin selling out? Aswath Damodaran says Wall Street’s takeover could ruin everything
He’s equally skeptical of Bitcoin’s growing role in portfolios and institutional strategies. While adoption may boost demand in the short term, Damodaran believes it could fundamentally alter Bitcoin’s nature.
- Jul 19, 2025,
- Updated Jul 19, 2025 7:00 AM IST
Aswath Damodaran, the NYU professor dubbed Wall Street’s “dean of valuation,” has long called Bitcoin “a currency designed by the paranoid for the paranoid.”
But in his latest deep-dive, he strips away the crypto mythos and delivers a sharper warning: Bitcoin is not an investment — it’s a speculative game. And corporate America has no business betting shareholder cash on it.
For Damodaran, Bitcoin's appeal has always rested more on narrative than substance. Born out of the 2008 financial crisis, it promised to sidestep failed institutions and operate outside state control. But 17 years on, its use as a currency remains limited, its volatility extreme, and its fundamentals nonexistent. “Bitcoin can be priced, not valued,” he writes — a subtle but crucial distinction. With no cash flows or productive use, Bitcoin doesn’t lend itself to traditional analysis. Its price is driven by sentiment, not substance.
That distinction carries major implications for companies. Damodaran argues forcefully that corporate holdings of Bitcoin are a mistake — not just unwise, but fundamentally misaligned with how businesses should operate. Firms hold cash to act as a buffer, to stabilize through downturns. Bitcoin, which behaves like a hyper-volatile tech stock, undermines that role. He likens the swap to “replacing shock absorbers with pogo sticks.” Worse, companies risk muddying their business narratives by chasing crypto upside — confusing investors, destabilizing earnings, and turning CEOs into traders, a role he says most are ill-equipped to play.
Even if a company believes in Bitcoin’s future, Damodaran insists that any such move must come with strict guardrails: shareholder approval, transparent disclosure of trades, and clear accounting rules. Without these, he warns, “the door is wide open to abuse.”
He’s equally skeptical of Bitcoin’s growing role in portfolios and institutional strategies. While adoption may boost demand in the short term, Damodaran believes it could fundamentally alter Bitcoin’s nature. As institutions pile in, Bitcoin risks becoming just another financial asset, tethered to the same market cycles it was supposed to escape. He points to securitized real estate in the '80s and '90s as a cautionary tale — once “alternative,” now just part of the pack.
Ultimately, he says, Bitcoin remains a speculative play, not a hedge. “If the endgame is to make Bitcoin millennial gold,” Damodaran warns, “it should steer clear of the establishment. That may be the only way it keeps its soul.”
Aswath Damodaran, the NYU professor dubbed Wall Street’s “dean of valuation,” has long called Bitcoin “a currency designed by the paranoid for the paranoid.”
But in his latest deep-dive, he strips away the crypto mythos and delivers a sharper warning: Bitcoin is not an investment — it’s a speculative game. And corporate America has no business betting shareholder cash on it.
For Damodaran, Bitcoin's appeal has always rested more on narrative than substance. Born out of the 2008 financial crisis, it promised to sidestep failed institutions and operate outside state control. But 17 years on, its use as a currency remains limited, its volatility extreme, and its fundamentals nonexistent. “Bitcoin can be priced, not valued,” he writes — a subtle but crucial distinction. With no cash flows or productive use, Bitcoin doesn’t lend itself to traditional analysis. Its price is driven by sentiment, not substance.
That distinction carries major implications for companies. Damodaran argues forcefully that corporate holdings of Bitcoin are a mistake — not just unwise, but fundamentally misaligned with how businesses should operate. Firms hold cash to act as a buffer, to stabilize through downturns. Bitcoin, which behaves like a hyper-volatile tech stock, undermines that role. He likens the swap to “replacing shock absorbers with pogo sticks.” Worse, companies risk muddying their business narratives by chasing crypto upside — confusing investors, destabilizing earnings, and turning CEOs into traders, a role he says most are ill-equipped to play.
Even if a company believes in Bitcoin’s future, Damodaran insists that any such move must come with strict guardrails: shareholder approval, transparent disclosure of trades, and clear accounting rules. Without these, he warns, “the door is wide open to abuse.”
He’s equally skeptical of Bitcoin’s growing role in portfolios and institutional strategies. While adoption may boost demand in the short term, Damodaran believes it could fundamentally alter Bitcoin’s nature. As institutions pile in, Bitcoin risks becoming just another financial asset, tethered to the same market cycles it was supposed to escape. He points to securitized real estate in the '80s and '90s as a cautionary tale — once “alternative,” now just part of the pack.
Ultimately, he says, Bitcoin remains a speculative play, not a hedge. “If the endgame is to make Bitcoin millennial gold,” Damodaran warns, “it should steer clear of the establishment. That may be the only way it keeps its soul.”