Nouriel Roubini, a Stern School professor and prominent economist, has criticized the major correction of Bitcoin and the rest of the crypto market, claiming that Bitcoin will drop to zero.
Tales From Crypt-Apocalypse: Bitcoin has lost 70% from the peak; Ethereum 85%; other Top 10 crypto-currencies about 90%; the remaining crypto-zombie-currencies between 95% & 99% of their value. It is a bloody massacre that will continue as almost all of them are worth ZERO!
— Nouriel Roubini (@Nouriel) September 6, 2018
Illogical Argument
Roubini argued that Bitcoin would fall to zero because it fell 70 percent in the past eight months and there exists no possibility of the dominant cryptocurrency recovering.
However, in its nine-year history, Bitcoin has fallen by more than 80 percent on three occasions, all of which ultimately led it to recover beyond previous all-time highs.
In 2013, for example, Bitcoin experienced an 83 percent correction from its all-time high achieved in 2012. The next year, it achieved a new all-time high, only to fall by more than 87 percent in 2014. After a mid-term recovery, in 2015, Bitcoin experienced yet another 87 percent correction and reached $19,500 in 2017.
2012: New ATH
2013: 83% correction from ATH
2013: New ATH
2015: 87% correction from ATH
2017: New ATH
2018: 71% correction from ATHBitcoin has yet to make a new ATH without a greater than 80% correction.
An 80% correction from 2017 ATH would be approximately $4000.
— NebraskanGooner (@nebraskangooner) September 9, 2018
The history of the Bitcoin market clearly demonstrates that. As Coinbase CTO Balaji Srinivasan previously emphasized, the market goes through a pattern of bubble-crash-build-rally, and each time cryptocurrencies experience a major correction, they rebound stronger than before.
As such, Roubini’s argument that Bitcoin will hit zero solely because it has dropped by more than 70 percent is inaccurate. If history is any indicator, Bitcoin is highly likely to achieve a new all-time high next year, given its price movement since 2012.
Why Are Banks Facilitating Demand From Institutions?
Earlier this week, Business Insider reported that $175 billion New York-based bank Citigroup would offer cryptocurrency custody to its clients in the form of digital asset receipts (DARs). As a custody solution, Citigroup’s DARs will allow accredited investors and institutions to invest in the crypto market, without holding digital assets, through a regulated channel offered by the bank.
Goldman Sachs has also announced that it has begun to prioritize the offering of cryptocurrency custody solutions to support the increasing demand from institutions.
The motivation behind institutions to invest in cryptocurrencies, an asset class that is still in infancy, is clear. Apart from gold, cryptocurrencies are the only asset class that remains unaffected by the broader financial market.
Western Carolina University professors Lawrence Trautman and Taft Dorman support the concept, publishing a paper in July that stated:
“The short-term price fluctuations may make Bitcoin a better candidate for portfolio construction at the institutional level rather than the individual investor level.”
A recent paper released by The Economist, meanwhile, cited that Roubini claimed it is difficult to justify the value of cryptocurrencies due to their lack of use cases, criticizing their encouragement of speculation. The paper read:
“With few uses to anchor their value, and little in the way of regulation, cryptocurrencies have instead become a focus for speculation.”
However, the paper dismisses speculation as a use case because an asset’s ability to hold and retain value is a use case of its own, as seen in gold. If gold’s secondary use case is its applicability in jewelry, for example, then Bitcoin or Ethereum’s secondary use case is their ability to process information in a decentralized manner, opening the ecosystem to decentralized applications (dApps) and systems.
Simply put, most criticisms against Bitcoin, Ethereum and other major public blockchains are around their price and value, specifically the recent correction of the cryptocurrency market. If price is the fundamental argument of these criticisms, then the same argument can no longer be made as the cryptocurrency market recovers in the mid-term.
The post Stern Professor Says Bitcoin Will Hit Zero After 70 Percent Drop, Illogical Argument appeared first on CryptoSlate.
Source: CryptoSlate
Original Post: Stern Professor Says Bitcoin Will Hit Zero After 70 Percent Drop, Illogical Argument
