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 Bitcoin is not a currency but a speculative asset whose fundamental value is zero. He appeared to back 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's just a highly speculative asset with a fundamental value of zero. pic.twitter.com/leA4Fe9Ixz

— Steve Hanke (@steve_hanke) March 26, 2023

Considering the role of the USD in the world’s market, the currency minted by the Federal Reserve has been historically used to hedge against economic crises. The USD remains as a store value, explaining the currency’s spike in valuation whenever the equities market tank.

Hanke’s comments come when Bitcoin and cryptocurrencies have been outperforming traditional assets, expanding amid the banking crisis in the United States.

Following the bank run on Silicon Valley Bank (SVB) and the subsequent intervention by the United States government, where the Federal Reserve had to inject liquidity, averting a crisis, Bitcoin prices have been rallying. Last week, BTC peaked at 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, dismissing its use as a hedge. Specifically, he mentions the coin’s speculative nature, a trait also linked to the asset’s volatility.

In another tweet, the economist lauded the United States Securities and Exchange Commission (SEC) for getting serious about going after Coinbase, a cryptocurrency exchange. The regulator says Coinbase has violated a range of investor protection rules. 

1/ Today Coinbase received a Wells notice from the SEC focused on staking and asset listings. A Wells notice typically precedes an enforcement action.

— Brian Armstrong (@brian_armstrong) March 22, 2023

The Wells Notice would possibly be the beginning of a legal showdown between the SEC, that’s been, in recent months, clamping down hard on crypto businesses, 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, often known as “Dr. Doom”, who has been very vocal about his disdain for crypto. Roubini is a New York University professor emeritus and a Bitcoin critic. The professor celebrated the collapse of Silicon Valley Bank (SVB) and Signature Bank of New York in mid-March, slamming them for getting involved in cryptocurrencies. 

In a tweet, Roubini said all banks supporting cryptocurrencies would collapse and that it was good riddance. He added that there was no logic in protecting depositors of Signature Bank, an institution that “recklessly decided to jump into the crappy crypto cesspool and bet the house on shitcoins biz.”

Earlier, Roubini said crypto is risky, and the entire industry will go extinct. 

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