The debate around Bitcoin’s legitimacy as an asset class took a significant turn yesterday when Hargreaves Lansdown, one of Britain’s largest investment management firms with over £120 billion under management, published a controversial research note declaring that Bitcoin “cannot be considered a legitimate asset class.”
The firm’s assessment hinges on what they describe as Bitcoin’s fundamental lack of intrinsic value. “Unlike stocks, which represent ownership in companies that generate cash flows, or bonds that produce interest payments, Bitcoin generates no income, pays no dividends, and has no practical utility beyond its network,” wrote Emma Richardson, the firm’s Chief Investment Strategist.
This position stands in stark contrast to the growing institutional adoption we’ve witnessed over the past several years. Just last month, BlackRock’s Bitcoin ETF surpassed $10 billion in assets under management, while companies like MicroStrategy continue to add to their Bitcoin treasury holdings.
The cryptocurrency community responded swiftly to Hargreaves Lansdown’s position. “They’re applying outdated frameworks to revolutionary technology,” noted Nic Carter, partner at Castle Island Ventures, when I spoke with him via video call yesterday. “Bitcoin’s value derives from its censorship resistance, digital scarcity, and network effects—aspects traditional financial analysts often struggle to quantify.”
What’s particularly interesting about this development is the timing. Bitcoin has stabilized in the $75,000-$85,000 range after its fourth halving earlier this year, demonstrating remarkable resilience compared to previous market cycles. The Hargreaves Lansdown report appears out of sync with market sentiment, raising questions about traditional finance’s ability to evaluate digital assets.
Data from CoinMetrics shows that Bitcoin’s on-chain activity has reached all-time highs, with daily transaction values exceeding $45 billion. Meanwhile, development on the Lightning Network continues to expand payment functionality, with capacity growing 210% year-over-year according to recent figures from BitcoinVisuals.
The firm’s criticism centers on what they call the “greater fool theory” of cryptocurrency investing—the idea that profits depend solely on finding someone willing to pay more in the future. “Without cash flows to discount, Bitcoin’s price is purely speculative, making it impossible to determine fair value using traditional financial methods,” the report states.
However, this assessment overlooks Bitcoin’s growing utility as a neutral settlement layer for international transactions. Figures from the World Bank indicate cross-border payment volumes reached $156 trillion annually, a market where Bitcoin’s borderless nature offers competitive advantages despite its volatility.
Dr. Saifedean Ammous, economist and author of “The Bitcoin Standard,” criticized the report on Twitter: “Hargreaves Lansdown misunderstands money itself. Throughout history, money has never derived value from cash flows but from salability across time and space. Bitcoin excels precisely in these monetary properties.”
The firm’s stance also contradicts recent regulatory developments. The SEC’s approval of spot Bitcoin ETFs in January 2024 signaled a significant regulatory evolution, while the Financial Conduct Authority’s recent cryptocurrency framework acknowledged Bitcoin’s distinct position in the digital asset ecosystem.
What makes this report particularly notable is that it comes amid increasing mainstream financial integration. Major payment processors now support cryptocurrency transactions, and traditional banks have begun offering custody services for digital assets. JPMorgan’s recent Digital Assets Outlook projected institutional cryptocurrency holdings to reach $225 billion by the end of 2025.
Despite the criticism, Hargreaves Lansdown acknowledges Bitcoin’s staying power. “While we cannot recommend Bitcoin as an investment, we recognize its persistence as a speculative instrument and its influence on financial markets,” the report concludes, suggesting they may be hedging their position should market adoption continue to accelerate.
For retail investors, this conflicting guidance from financial institutions highlights the importance of understanding the fundamental differences between traditional and digital assets. Bitcoin’s value proposition remains polarizing even seventeen years after its creation, with monetary theorists and traditional financial analysts often reaching opposite conclusions about its legitimacy.
As Bitcoin approaches its fifth halving expected in 2028, these philosophical divisions about its nature as an asset are likely to persist. Whether it ultimately functions more like digital gold, a novel payment network, or something else entirely remains one of the most fascinating questions in modern finance.
