• Nobel Laureate Paul Krugman has expressed his doubts about the cryptocurrency craze and likened it to the US housing bubble of the mid-2000s.
• Last Tuesday, Krugman wrote an opinion piece in the New York Times regarding Tesla, bitcoin, and their massive market prices, inquiring whether the Tesla story ever made sense.
• This came after Tesla’s stock fell 11.4% in response to reports that the company reduced its manufacturing output in China.
Nobel Laureate Paul Krugman is the latest intellectual to express his doubts about the cryptocurrency craze. Last June, the American economist drew parallels between the cryptocurrency market and the US housing bubble of the mid-2000s, stating that consumers’ belief in crypto assets is comparable to their enthusiasm in the US home market prior to its collapse.
Fast forward six months and Krugman has compared the crypto to Tesla and its stocks. Last Tuesday, the Nobel Prize-winning economist wrote an opinion piece in the New York Times regarding Tesla, bitcoin, and their massive market prices, inquiring: “Did the Tesla story ever make sense?”. In his article, he pointed out that Tesla and bitcoin may have more in common than people think.
This came after Tesla’s stock fell 11.4% in response to reports that the company had reduced its manufacturing output in China. Between the first week of January 2020, and November 2021, Tesla’s stock price increased by more than 13 times. Since then, the stock has dropped 73%, reducing the market valuation of the electric car firm from almost $1.2 trillion to less than $350 billion as of Tuesday’s close.
Paul Krugman is a notable author and educator who specializes in International Economics and Macroeconomics. He has been a professor of economics at Princeton University, Stanford University, and the London School of Economics, and is currently a professor at the Graduate Center of the City University of New York. He is a Yale University and Massachusetts Institute of Technology graduate, and has received numerous awards and honors, including the Nobel Memorial Prize in Economic Sciences in 2008.
Krugman’s remarks come at a time when the cryptocurrency industry is facing increased scrutiny from governments and regulators around the world. While some investors may be tempted by the potential of huge profits in this new asset class, Krugman’s comments should serve as a warning to be cautious when considering investing in cryptocurrencies.