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Bitcoin 'biggest bubble in human history', says economist who predicted 2008 global meltdown

After touching a record high of $19,000 in December 2017, Bitcoin has crashed to $8000 this week amid fear of global regulatory clampdown.

twitter-logoBusinessToday.in | February 5, 2018 | Updated 16:19 IST
Bitcoin is the 'biggest bubble in human history', says economist who predicted 2008 global meltdown

American economist Nouriel Roubini has called Bitcoin the 'biggest bubble in human history'. Roubini said this in an interview to Bloomberg where he was asked to describe the Bitcoin crisis. Roubini, who teaches at New York University's Stern School of Business, is known for predicting the 2008 US housing bubble. After touching a record high of $19,000 in December 2017, Bitcoin has crashed to $8000 this week amid fear of global regulatory clampdown.

Explaining the recent Bitcoin crisis, Roubini said: "This (Bitcoin) is mother of all bubbles and it is also the biggest bubble in human history if you compare it to Mississippi bubble, tech bubble, and Tulip mania." Bitcoin has crashed over 60 per cent compared to the peak of mid-December. It crashed 30 per cent last week and 10 per cent today (Saturday). It is on the way down to zero. The fundamental value of Bitocoin is zero," Roubini said.  

In a tweet put out on Sunday, Roubini hinted at the manipulation in Bitcoin's value by traders.  He said: "Bitcoin price heading south over the weekend towards a $7K handle (now down over 10% in last 24 hours to $8.2K). Will the wash traders react on Monday as they did on Friday and manipulate again the price upwards?" Roubini isn't the only economist to call Bitcoin a bubble.

A series of top economists and business investors including Warren Buffett have already termed it a bubble. Last year in October, Buffett said that Bitcoin was a 'real bubble'. "You can't value bitcoin because it's not a value-producing asset. It's a mirage basically," he reportedly said. His statement had come at a time when the cryptocurrency had started gaining momentum.  This year in January, Buffett again said that it was certain cryptocurrencies would come to a bad end.

A day after Roubini's biggest bubble statement,  Nobel Prize-winning economist Paul Krugman called Bitcoin enthusiasts crazy. In a tweet, he said: "I am surely not the only person experiencing a fair bit of cryptofreude - pleasure in watching the Bitcoin etc bubble deflate. Bitcoin cultists tend, after all, to be nasty as well as crazy; not all of them, but surely above the average 1." He also said that "We're now in the late stage of a bubble, where things get cruel."

Meanwhile, Reuters today reported that Lloyds Banking Group has said that it would soon ban its credit card customers from buying Bitcoin and other cryptocurrencies.  "Across Lloyds Bank, Bank of Scotland, Halifax and MBNA, we do not accept credit card transactions involving the purchase of cryptocurrencies," a company spokeswoman told Reuters.

In India, the government and the Central bank have issued multiple warnings against the cryptocurrencies. Finance Minister Arun Jaitley in his budget speech on February 1 reiterated that, "The government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system."

 

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