One of the economists who is credited for correctly predicting 2008 global financial crisis said that the recent plunge of Bitcoin exchange rates affirm that cryptocurrency was the biggest bubble in history and is destined for a crash.
Nouriel Roubini, professor of economics at New York University, said Bitcoin was “the mother of all bubbles” favoured by “charlatans and swindlers” as the currency dropped to a level below USD 8,000 on Friday in certain exchanges.
In the last seven days, the currency has dropped by 26 percent. On January 29, Bitcoin was trading at USD 11,300 level which is now at USD 8,200 level.
Roubini who is dubbed as “Dr Doom” predicted that the value of the digital currency would plummet “all the way down to zero”. Incidentally, Bitcoin has 'travelled' far down south from its height of USD 20,000 in December last year.
The currency has been affected by a flurry of negative news coming from across the world. Attackers stole about 500 million from Coincheck exchange in Japan. Authorities have clamped down on major exchanges in South Korea. Closer home, banks have frozen the accounts of major exchanges in India.
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The Indian finance minister Arun Jaitley in his budget speech said that the country does not recognise cryptocurrencies as a legal tender. He added that the government will fight the use of cryptocurrencies for “illegitimate activities”.
Talking to Bloomberg Television, Roubini said, “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.”
He added that over 1,500 cryptocurrencies which exist in the market were nothing but “a scam”. “Most of them are even worse [than Bitcoin] and don’t have any intrinsic value like Bitcoin. So if Bitcoin is a bubble, it’s a bubble to the power of two or three.”
The US regulators are investigating if the spike in the price of Bitcoin was a result of market manipulation.