Bill Gates doesn’t believe the hype about cartoon apes.
“Obviously, expensive digital images of monkeys are going to improve the world immensely,” Gates said on Tuesday at the TechCrunch Sessions: Climate 2022 conference, sarcastically referring to the Bored Ape Yacht Club NFTs that attracted millions of dollars and celebrity endorsements. Gates was at the conference as the founder of Breakthrough Energy, his sustainable energy venture fund.
Gates characterized cryptocurrencies and NFTs as a market driven by sentiment. “As an asset class, it’s 100% based on the greater fool theory—that somebody’s going to pay more for it than I do,” he said.
The greater fool theory is a practice in which people invest in overvalued assets—regardless of their actual underlying value—in hopes that someone else will come along and pay even more for it.
But markets driven by a belief that there will always be someone willing to pay more eventually hit a barrier—when there’s no one left willing to pay a higher price. Once that point is reached, asset prices can decline rapidly, leaving investors “holding the bag” with worthless assets.
Gates has previously criticized cryptocurrency for its lack of any real value. “The value of crypto is just what some other person decides someone else will pay for it, so not adding to society like other investments,” Gates said on a Reddit question-and-answer session in May.
Crypto prices are crashing as investors flee to less risky assets. Bitcoin is down by over 50% for the year. Once bullish crypto companies like Coinbase, Crypto.com, and BlockFi are laying off employees as trading volumes decrease. Falling crypto values are also sinking projects like crypto lender Celsius Network and Terraform Labs’ algorithmic stablecoin.
NFT values are also dropping amid the broader plunge in the crypto market.
The NFT Index, which tracks the performance of eight popular NFT-related tokens, is down 30% for the week, according to CoinMarketCap. An entry level BAYC NFT briefly sank below $100,000 on Tuesday, a level not breached since August 2021. The floor price is down 78% since late April, notes Decrypt.
Yet more people may now see NFTs as a bargain amid the crypto crash, with trading volume at NFT marketplace OpenSea up 173% over the past day.
For his part, Gates is ignoring the volatility of the crypto markets.
“I’m not involved in that. I’m not long or short,” he said.