Well-known economist Nouriel Roubini argues that retail investors are going to be crushed by ‘fear of missing out’ by investing in Bitcoin during its latest run.
‘We have, as in 2017, hundreds of thousands of small suckers who go FOMO (fear of missing out) in this asset class. And they’re going to buy it at the highest point, as it did in December 2017 when it was $ 20,000 and dropped to $ 3,000 by the end of next year. So, it’s the same phenomenon – just people pull in because of FOMO and feed the bubble, manipulation, eventually they will be crushed, ‘Roubini told Yahoo Finance Live on Monday.
The NYU Stern professor of economics argued that the rise of Bitcoin is driven by ‘massive manipulation’, and not a rush against inflation.
‘I think some of the upward movement is not driven by concerns about inflation or the devaluation of fiat currencies, because gold is not rising much, and TIPS (Treasury inflation-protected securities) are not rising much. Why would Bitcoin just be a hedge against inflation and a dismantling of the fiat currency? “There has to be something else – something else, there is massive manipulation,” Roubini said.
Roubini, whose nickname “Dr. Doom ”, argued that Bitcoin and other cryptocurrencies, which he calls ‘sh-tcoins’, have no place in a retail or institutional investor portfolio. He points to the ‘great degree of volatility’ as a cause for concern.
“You have to ask yourself whether retail investors or institutional investors should invest in something that is so risky and something that is not a currency and is not even an asset,” Roubini added.
Bitcoin (BTC-USD) peaked at $ 58,367 per coin over the weekend before dropping to $ 46,616 on Monday. The digital asset last traded above $ 54,000 at the time of this publication, still lower than the recent high.
‘The reality is that no one knows what the value of this hidden asset is. It has no value because it has no income, has no use, has no use. It is therefore a speculative game on a bubble that is self-fulfilling, ”Roubini added.
Julia La Roche is a correspondent for Yahoo Finance. Follow her further Twitter.