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Crypto’s gold standard claims are fading fast | Nils Pratley


The US-focused shake-out in financial markets has at least given us clarity on one point: bitcoin is not “digital gold” or a “store of value”, to mention two grand claims made about the cryptocurrency when its price was going up.

At $37,000, the late-afternoon level on Tuesday, bitcoin has fallen by 22% since the start of January and by 45% since recording an all-time high in early November. The crypto crew may have convoluted explanations for this setback, but the simplest one is best: bitcoin has always primarily been an instrument for pure speculation; when high-risk assets are out of favour, it will be clobbered.

If anything, Bitcoin is behaving like a souped-up proxy for the technology-heavy Nasdaq index in the US, down 14% since the start of 2022. So the parallel claim about “uncorrelated returns” doesn’t stack up either.

Meanwhile actual gold, a real store of value on the evidence of a few thousand years, has been doing roughly what it is supposed to do during an inflation scare: it has fluttered sideways to gently upwards over the past few months.

None of which precludes the possibility that bitcoin will rally when risk-taking appetites recover. But, if that happens, please let’s not hear a reheated version of the thesis (pushed by a Goldman Sachs strategist, bizarrely, only a few weeks ago) that bitcoin is competing with gold in “the store of value market” and thus could hit $100,000 if it grabs a 50% share.

Come on, cryptocurrencies are not playing on the same pitch, asset-wise, as gold – and one doubts they ever will.

Unilever’s plan B must be quick and slick

It wasn’t Unilever’s plan B, which was probably just as well. Investors would be unimpressed if the sole response to the failed £50bn tilt at GlaxoSmithKline’s consumer products business was an organisational shuffle that will remove 1,500 management roles around the world. Tuesday’s “simplification” of the business model will have been planned for ages. Details of a big strategic rethink, one assumes, will come with next month’s full-year results.

One can say, though, that the rejig should make it marginally easier for Unilever to churn its portfolio, which could be one part of the boardroom thinking that survives the GSK misadventure. Out goes Unilever’s “matrix” structure, a description of reporting lines arranged according to a mish-mash of geographies and products. In comes a theoretically simpler division of responsibilities along purely product lines. So: beauty and wellbeing, personal care, home care, nutrition and ice-cream.

The possibly important detail is the sub-division of food between the nutritious stuff and ice-cream. The latter, including Wall’s and Ben & Jerry’s, looks an obvious candidate for disposal if the chief executive, Alan Jope, still hopes to sell assets to fund expansion in beauty and wellbeing.

It’s hard to quibble with the organisational reform since it brings Unilever roughly into line with Procter & Gamble, a company many shareholders wish their company could be more like. Jope promises the new arrangement will deliver “crystal clear accountability for delivery”. The buck, though, ultimately stops on his desk, as he will know after a bruising fortnight. His real plan B has to be slick.

Arm’s awkward wrestle with reality

Tech-obsessed officials at the London Stock Exchange need to be alert. Nvidia, the US semiconductor chip giant, is preparing to abandon its $40bn takeover pursuit of Arm Holdings, reported Bloomberg on Tuesday; and the UK company’s current owner, SoftBank of Japan, is said to be lining up a flotation, or IPO, as an alternative.

Before SoftBank’s purchase in 2016, Arm was London’s strongest claim to seriousness in tech. A relisting would give scope for an uplifting “coming home” tale for a company born in a barn outside Cambridge whose chip designs became world-leading. It would be a shocker if SoftBank were to shove Arm towards New York.

Mind you, an IPO anywhere would create a messaging headache for Arm chief executive Simon Segars. Here’s what he wrote last July in a blogpost that furiously defended the benefits of acquisition by Nvidia and tried to allay the regulatory and competition concerns that now appear likely to kill the deal: “We contemplated an IPO but determined that the pressure to deliver short-term revenue growth and profitability would suffocate our ability to invest, expand, move fast and innovate”.

So, roll up, who wants to buy shares in a company where the boss says independence will feel like suffocation? Awkward.



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