Economics Nobel Laureate Paul Krugman has issued an ominous warning about the volatile cryptocur...
Economics Nobel Laureate Paul Krugman has issued an ominous warning about the volatile cryptocurrency market, comparing it to the subprime mortgage crisis of the late 2000s.
Primary Overview:
In an op-ed for The New York Times on Thursday, Krugman said he was "uncomfortable about the parallels" between that and the subprime mortgage bust.
That, later on, brought the entire housing market to its knees and sparked the 2007-08 global financial crisis.
"There are troubling echoes of the subprime mortgage crash 15 years ago," Krugman says in the article.
| Trending: The HIGHLY Anticipated Microverse Is In! Doge Temple Creator! |
This was a result of banks lending to higher-risk individuals at a time when interest rates were low and home prices were soaring.
Once the market was saturated, they saw each other Homeowners are faced with negative equity that has been unable to repay their loans, resulting in huge losses for lenders.
Krugman argues that crypto investors are similarly selling speculative financial products without really understanding the risks involved.
It is worth noting that Krugman is a well-known bitcoin bear, having previously involved the cryptocurrency with a Ponzi scheme has equaled.
"Many borrowers have not understood what they are getting themselves into," he said in the NYT statement.
“And cryptocurrencies, with their huge price fluctuations that seem unrelated to fundamentals, are about as risky as an asset class gets.
However, the Nobel laureate isn't convinced that cryptocurrencies pose a systemic risk: "The numbers aren't big enough for that."
The entire crypto market is worth about $1.7 trillion, according to CoinGecko data. Bitcoin and other digital currencies have fallen sharply over the past few weeks nearly $69,000.
At its peak, the entire crypto market combined was worth $3 trillion.
