Newblock
  • News
    • Bitcoin
    • Ethereum
    • XRP
    • Solana
    • Cardano
    • Blockchain News
    • Press Releases
    • Events
  • Analysis
    • Market Analysis
    • Price analysis
  • Ranking
No Result
View All Result
  • Login
Buy crypto
Newblock
  • News
    • Bitcoin
    • Ethereum
    • XRP
    • Solana
    • Cardano
    • Blockchain News
    • Press Releases
    • Events
  • Analysis
    • Market Analysis
    • Price analysis
  • Ranking
No Result
View All Result
Newblock
Nobel Laureate Paul Krugman Likens Crypto Market to Subprime Mortgage Crash — Warns Regulators Are Making the Same Mistake

Nobel Laureate Paul Krugman Likens Crypto Market to Subprime Mortgage Crash — Warns Regulators Are Making the Same Mistake

January 30, 2022
in Bitcoin News
419 8
0
Share on FacebookShare on Twitter

Nobel Prize-winning economist Paul Krugman sees parallels between the crypto market and the subprime mortgage crash. “There’s growing evidence that the risks of crypto are falling disproportionately on people who don’t know what they are getting into and are poorly positioned to handle the downside,” he stressed.

Nobel Laureate Paul Krugman Warns About Crypto Crashing Like Subprime Mortgage

Nobel laureate Paul Krugman warned about cryptocurrency investing in an opinion piece he authored in the New York Times, published Thursday. Krugman won the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 2008 “for his analysis of trade patterns and location of economic activity,” the Nobel Prize website shows.

The Nobel Prize winner began by acknowledging that “crypto has become a pretty big asset class,” noting that the market value of all cryptocurrencies reached almost $3 trillion last fall. He added that the prices of cryptocurrencies have crashed, “wiping out around $1.3 trillion in market capitalization.”

However, Krugman believes that “crypto doesn’t threaten the financial system,” citing that “the numbers aren’t big enough to do that.”

Nonetheless, the economist warned that “There are disturbing echoes of the subprime crash 15 years ago,” elaborating:

I’m seeing uncomfortable parallels with the subprime crisis of the 2000s … There’s growing evidence that the risks of crypto are falling disproportionately on people who don’t know what they are getting into and are poorly positioned to handle the downside.

Krugman explained that “Investors in crypto seem to be different from investors in other risky assets, like stocks, who consist disproportionately of affluent, college-educated whites.” He cited a survey by the research organization NORC, stating that 44% of crypto investors are nonwhite and 55% don’t have a college degree.

While NORC says that “cryptocurrencies are opening up investing opportunities for more diverse investors,” Krugman pointed out that “subprime mortgage lending was similarly celebrated … it was hailed as a way to open up the benefits of homeownership to previously excluded groups.”

Krugman continued: “cryptocurrencies, with their huge price fluctuations seemingly unrelated to fundamentals, are about as risky as an asset class can get.”

Noting that skeptics say cryptocurrencies are only good for “money laundering and tax evasion,” with some warning that bitcoin is a bubble, he said that “it’s OK for investors to bet against the skeptics.”

However, the Nobel laureate cautioned: “But these investors should be people who are both well equipped to make that judgment and financially secure enough to bear the losses if it turns out that the skeptics are right.” He concluded:

Unfortunately, that’s not what is happening. And if you ask me, regulators have made the same mistake they made on subprime: They failed to protect the public against financial products nobody understood, and many vulnerable families may end up paying the price.

What do you think about Nobel laureate Paul Krugman’s comments? Let us know in the comments section below.

Source link

You might also like

G7 Countries Crypto

G7 Countries, EU Taking Measures to Prevent Crypto Use to Evade Sanctions

March 5, 2022
Coinbase CEO Russians Crypto

Coinbase CEO Says Ordinary Russians Use Crypto as a Lifeline as the Ruble Collapses

March 5, 2022

Related News

G7 Countries Crypto

G7 Countries, EU Taking Measures to Prevent Crypto Use to Evade Sanctions

by Editorial Team
March 5, 2022
1

G7 countries and the European Union are examining ways to stop the use of cryptocurrency by Russia to evade sanctions....

Coinbase CEO Russians Crypto

Coinbase CEO Says Ordinary Russians Use Crypto as a Lifeline as the Ruble Collapses

by Editorial Team
March 5, 2022
1

The CEO of the Nasdaq-listed crypto exchange Coinbase says ordinary Russians are using cryptocurrency as a lifeline now that their...

Bitcoin Mining Difficulty Drops

Bitcoin Miners Catch a Break as Mining Difficulty Drops for the First Time in 3 Months

by Editorial Team
March 5, 2022
1

Bitcoin miners got a small break on March 3, after the network’s mining difficulty shifted downward for the first time...

Arbitrum Treasure DAO hack

Attacker Hacks Arbitrum’s Treasure DAO for Over 100 NFTs by Leveraging Marketplace Exploit

by Editorial Team
March 5, 2022
1

A non-fungible token market platform built on top of Arbitrum called Treasure DAO was hacked on March 3 at 7:33...

Next Post
Vitalik Buterin to Use $100 Million From Crypto Relief’s SHIB Funds to Accelerate Covid Relief Efforts

Vitalik Buterin to Use $100 Million From Crypto Relief's SHIB Funds to Accelerate Covid Relief Efforts

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Get daily news updates to your inbox!

Popular

  • crypto price analysis

    BTC, ETH, BNB, ADA, SOL, XRP, LUNA, DOGE, DOT, AVAX

    21678 shares
    Share 8671 Tweet 5420
  • Google Launches Blockchain Division

    5331 shares
    Share 2131 Tweet 1332
  • Microsoft Reveals Activision Purchase for $68.7 Billion as an Approach to the Metaverse

    972 shares
    Share 389 Tweet 243
  • GAIMIN Brings Blockchain and NFTs to Minecraft – Press release Bitcoin News

    957 shares
    Share 383 Tweet 239
  • Coinbase exec says major Ethereum scaling improvements coming soon

    923 shares
    Share 369 Tweet 231

Recommended

UAE crypto licensing

UAE Prepares to Launch Nationwide Crypto Licensing System in Line With Global Standards

February 19, 2022
SCRT Labs Launches $400 Million Fund to Bolster Privacy Network’s Ecosystem and Application Layer

SCRT Labs Launches $400 Million Fund to Bolster Privacy Network’s Ecosystem and Application Layer

January 20, 2022
Newblock

Newblock is a blockchain news service that covers bitcoin and altcoin news, technical analysis & forecasts for bitcoin price and other altcoins.
© 2022 Newblock

Navigate Site

  • Blockchain news
  • Crypto Analysis
  • Ranking
  • Media Partnerships
  • Privacy Center
  • Contact Us
  • Donate

Follow Us

No Result
View All Result
  • News
    • Bitcoin
    • Ethereum
    • XRP
    • Cardano
    • Solana
    • Blockchain News
    • Press Releases
    • Events
  • Analysis
    • Market Analysis
    • Price analysis
  • Ranking
  • Buy Crypto
  • Privacy Center
  • Contact Us
  • Donate

Newblock is a blockchain news service that covers bitcoin and altcoin news, technical analysis & forecasts for bitcoin price and other altcoins.
© 2022 Newblock

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.