Why This Economics Professor Thinks Bitcoin Is Worthless
Steve Hanke, a professor of applied economics at Johns Hopkins University, is the latest scholar to trash Bitcoin.
Bitcoin has no fundamental value, says professor
In a tweet on March 26, Hanke said that Bitcoin is not a currency, but a speculative asset whose fundamental value is zero. He appeared to support fiat, including the Japanese yen and the USD, two of the world’s reserve currencies, as appropriate hedges in economic turmoil.
Bitcoin is not a currency. It is just a highly speculative asset with a fundamental value of zero. pic.twitter.com/leA4Fe9Ixz
— Steve Hanke (@steve_hanke) March 26, 2023
Given the dollar’s role in the world market, the currency championed by the Federal Reserve has historically been used to hedge against economic crises. The USD remains as a store value, which explains the currency’s rise in valuation when the stock market falls.
Hanke’s comments come as Bitcoin and cryptocurrencies have outperformed traditional assets, expanding amid the US banking crisis.
After the bank run on Silicon Valley Bank (SVB) and the subsequent intervention by the US government, where the Federal Reserve had to inject liquidity, to avert a crisis, Bitcoin prices have risen. Last week, BTC peaked around $28,800, the highest in over nine months.
The expansion of Bitcoin prices while banking stocks were under pressure, observers note, was enough to justify the digital gold’s role as a store of value. Hanke is pessimistic about Bitcoin, rejecting its use as a hedge. In particular, he mentions the speculative nature of the coin, a characteristic that is also linked to the asset’s volatility.
In another tweet, the economist praised the United States Securities and Exchange Commission (SEC) for taking it seriously after Coinbase, a cryptocurrency exchange. The regulator says Coinbase has violated a number of investor protection rules.
1/ Today Coinbase received a Wells Notice from the SEC focusing on stakes and asset listings. A Wells notice usually precedes an enforcement action.
— Brian Armstrong (@brian_armstrong) March 22, 2023
The Wells notice will possibly be the beginning of a legal showdown between the SEC, which has been cracking down on crypto companies in recent months, and Coinbase, the largest crypto exchange in the country.
Dr. Doom celebrated the failure of crypto-friendly banks
Hanke joins the likes of Nouriel Roubini, commonly known as “Dr. Doom,” who has been very vocal about his disdain for crypto. Roubini is a professor emeritus at New York University and a Bitcoin critic. The professor celebrated the collapse of Silicon Valley Bank (SVB) and Signature Bank of New York in mid-March, criticizing them for being involved in cryptocurrencies.
In a chirping, Roubini said that all banks supporting cryptocurrencies would collapse and that it was good to get rid. He added that there was no logic in protecting depositors of Signature Bank, an institution that “recklessly decided to jump into the wretched crypto sewer and bet its house on the shitcoin biz.”
Earlier, Roubini so crypto is risky and the whole industry will die out.
Feature image from Canva, chart from TradingView
