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Cryptocurrency News Articles
Economist Stands Firm on Bitcoin as 'Just Another Bubble'
Nov 04, 2024 at 11:03 am
The former head economist of the Institute of International Finance, Robin Brooks, maintains her stance that Bitcoin is "just another bubble asset" despite the significant increases that the flagship cryptocurrency has enjoyed.
Economist Robin Brooks remains unconvinced by Bitcoin's recent rally, calling it "just another bubble" driven by Federal Reserve rate cuts.
Despite Bitcoin shattering previous records, some economist are remaining skeptical. For instance, Robin Brooks, the former head economist of the Institute of International Finance, maintains her stance that Bitcoin is "just another bubble asset." The flagship cryptocurrency has enjoyed significant increases, but Brooks attributes them to something else entirely.
The economic expert has downplayed the recent upswing, saying it was just the Federal Reserve's interest rate decrease in action.
"Bitcoin is up 300% from last June, but it's still a bubble asset with zero income and diversification benefits. Maybe a good way to lose money, but not to store it," Brooks wrote in March 2023.
Economist Stands Firm on Bitcoin as 'Just Another Bubble'
Brooks' Bold Claims Stir Bitcoin Community
Brooks' statement stirred the Bitcoin community, especially considering Bitcoin's almost record-breaking rally. After rising to $24,000 on Monday morning, the flagship crypto was up over 300% from last June.
The statement also drew attention due to Brooks' role in the past. Before joining the Institute of International Finance, she worked at the International Monetary Fund. Moreover, she is well-known in the crypto community for her varied viewpoints on digital assets.
After fans noticed his statement from last year, they engaged in a fresh round of "I-told-you-soing." But Brooks continued to defend her statement, emphasizing that it was not a prediction about the cryptocurrency's price direction.
"This statement was not about predicting the future price of Bitcoin. It was about highlighting the absurdity of valuing Bitcoin at 100x earnings for an asset with no earnings and zero diversification benefits," she wrote.
A Continued Defense Amid Bitcoin's Surge
Brooks went on to explain that Bitcoin's recent rally was unsustainable and could be attributed to the ETF boom and the Federal Reserve's rate cuts. She added that the flagship crypto could continue to fall as the Fed begins raising rates again.
"Bitcoin could easily halve again as the Fed starts hiking again. It's not a prediction, just an observation that the recent surge was driven by multiple ETF launches and the first rate cut since 2020," she wrote.
In 2022, Bitcoin took a nosedive as the Federal Reserve began raising interest rates aggressively to curb inflation that was spiraling out of control. However, the central bank shifted gears in 2023 and started cutting rates again.
Moreover, the ProShares Bitcoin Strategy ETF (NYSE:BIT) began trading in March, marking the first ETF approval by the Securities and Exchange Commission. Several other Bitcoin ETFs were also launched later on.
"The SEC finally approved a Bitcoin ETF in 2023, and the ProShares Bitcoin Strategy ETF (NYSE:BIT) began trading on March 20. Several other Bitcoin ETFs were also launched later in the year."
According to U.Today, Bitcoin surged to a new record high in early 2024 thanks to the ETF boom. The Federal Reserve also dropped interest rates for the first time since 2020 in September, which helped risky assets like Bitcoin rise in price.
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