Bitcoin a bubble waiting to burst, expert warns
Cybercurrency bitcoin has surpassed US$10,000 in value for the first time since its introduction nine years ago, but a Kasinkornbank researcher says it’s a bubble that’s about to burst.
“Bitcoin mania is like the tulip ‘gold rush’ before the investment bubble collapsed in 1637 and the craze for toxic financial products in the US before the global financial crisis of 2007-2008,” said Kobsidthi Silpachai, head of capital markets research at Kasikornbank.
He warned that bitcoin has no “economic fundamentals” to back up its soaring value.
Paul Krugman, the American Nobel laureate in economics, earlier dubbed the bitcoin “an evil”. To be successful, he said, money must be both a medium of exchange and a reasonably stable store of value. Bitcoin appears not to be a stable store of value, he said.
Central bank governor Veerathai Santiprabhob has also warned of high risk in investing in cryptocurrencies because there is no way to regulate them.
He said investors searching for high yield in time of high market liquidity and low deposit rates might overlook the riskiest assets class.
Bitcoin’s proponents argue, however, that blockchain technology and the ability to bypass central banks make bitcoin transactions more efficient. Bitcoins can be exchanged peer-to-peer without middlemen or regulators.
