Nobel Prize-winning economist Paul Krugman argues that the current crypto crash differs from previous cycles due to a crisis of faith after the previous rally was driven mostly by politics.
The "libertarian ideology" that historically supported Bitcoin’s floor doesn't apply now that the asset has become a "political creation."
"It has bounced back several times from big declines because people had faith in it and because... there was a lot of ideology behind it. But this time looks different," Krugman said.
"Fimbulwinter"
Krugman claims that BTC may be facing its "Fimbulwinter", a reference to Norse mythology that describes the final winter before Ragnarok (the end of the world).
He has argued that Bitcoin is not going to be an enduring asset after the leading cryptocurrency severely underperformed gold.
"…the next gold turns out to be gold, not Bitcoin. I think it's a big wake-up for people that, you know, maybe this isn't actually going to be an enduring asset," Krugman said.
"In terms of the original idea that this was actually a superior form of money, it's a total bust, and it's a 17-year-old bust. That's the thing that gets to me. This is not an idea of the future. This is not a cutting-edge technology. This is something that is only slightly younger than the first iPhone."
"If it hasn't made any inroads as an actual legitimate means of payment in 17 years, then clearly, it wasn't a great idea to start with," he said.
A bottom signal?
During the massive crypto crash, the industry’s most vocal and long-standing critics have re-emerged to read its last rites. In the span of just 48 hours, Krugman, Nouriel Roubini, and Mark Dow have all issued statements predicting the total collapse of the asset class. As reported by U.Today, Roubini recently went as far as predicting another crypto apocalypse.
Some market observers now view this chorus of doom as a buy signal.
Earlier today, Bitcoin crashed to $60,255, the lowest level since October 2024, but it then managed to pare these losses.
Alex Dovbnya
Tomiwabold Olajide
Gamza Khanzadaev