Despite surviving for over a decade, Bitcoin still appears to be a bubble waiting to burst in the eyes of many critics. Nouriel Roubini, an American economist and crypto critic has come out to voice his disapproval about the leading cryptocurrency.
According to Roubini, Bitcoin will never become a “digital gold” irrespective of the number of institutional investors that rush to embrace it as a store of value. The crypto critic told Kitco News that, unlike gold, Bitcoin lacks a use case and utility. He goes further to criticize the digital asset’s volatility, claiming that it eliminates Bitcoin’s use as a perfect store of value. He said:
Bitcoin doesn’t have any income. It doesn’t have any users, not even a means of payment, is not a stable store of value. It does not have utility. Nobody’s wearing bitcoin jewelry; that’s tacky, and therefore, how do you even price it? What’s the fundamental value of it? For any other assets, you have a set of economic fundamentals that can justify it. So the idea that Bitcoin is the digital gold, in my view, doesn’t make sense. And by the way, whenever there is a risk of episodes, Bitcoin falls more than other risky assets.
Overall, Roubini asserts that Bitcoin and other cryptocurrencies are a bubble and will eventually burst. He believes that the sector’s total market cap of $2.3 trillion is not enough to displace or impact the traditional financial sector. And on this note, if the bubble were to pop, individual investors will be the worst hit.
Roubini also claimed that if the stock market should correct, it could trigger the collapse of the cryptocurrency sector. Furthermore, as regulatory measures begin to tighten up, the cryptocurrency industry could witness a major sell-off.
Away from whether Bitcoin and other cryptocurrencies will survive, Roubini explained that the emergence of central bank-backed digital currencies (CBDCs) could tilt the scale in favor of governments who want to retain their monopoly over money. If CBDCs go mainstream, then they could wipe out cryptocurrencies.
Not everyone agrees with Roubini’s claims that Bitcoin lacks utility. MicroStrategy CEO Michael Saylor described Bitcoin as a perfect store of value. More recently, the newly elected chairman of the U.S. Securities and Exchange Commission referred to Bitcoin as a “digital, scarce store of value, but highly volatile.”