Nouriel Roubini, the man who successfully predicted the 2008 global financial crisis has called Bitcoin and Cryptocurrency, the ‘mother of all [speculative] bubbles’ as its price sunk below $8,000 last Friday.
At the time of writing, the value of Bitcoin sat at $ 7,700, just over 60% down on its $20,000 high December peak. Speaking in an interview with Bloomberg last last week, Roubini, who works for New York University, and also runs his own company, cast doubts on the utility and general usefulness of blockchain in general.
We’re all doomed, doomed I tell you, doomed; probably
Before being proved right, Roubini was publicly labeled as “Dr. Doom” by other economists and media commentators when he successfully predicted that the the biggest financial crash since the 1930s was imminent back in 2007.
“This [Bitcoin] is the mother of all bubbles,” Roubini told Bloomberg when asked. “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 Bitcoin is zero”.
Dust and Shadows
Roubini also said he was skeptical of many who were involved in Bitcoin, saying it was being promoted and used by “charlatans and swindlers”.
The (now) highly acclaimed economist said that the dramatic downward price drops in recent weeks were the start of a crash that would see the nascent digital currency sink “all the way down to zero”.
Roubini continued: “Policymakers and regulators are getting worried. Pretty much every G20 policymaker is talking about a crackdown. We can’t allow it to become the next Swiss bank account for use by criminals and people evading tax”.
Conspiracy or fact?
Following his interview with Bloomberg, Roubini courted controversy by commenting on rampant market manipulation by traders in the unregulated market, by tweeting: “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 also claimed that Bitcoin mining was an environmental catastrophe if its soaring energy costs were taken into account.
Roubini didn’t just offer criticism of Bitcoin however. Of the 1300 plus other cryptocurrencies in existence, “most of them are even worse…[and constitute] a bubble to the power of two or three”.