‘Dr Doom’ Nouriel Roubini Admits Bitcoin May Be a Store of Value, Sees Big Revolution in Central Bank Digital Currencies | News Bitcoin News
Economist Nouriel Roubini, also known as “Dr. Doom,” has admitted that bitcoin may be a store of value. Roubini sees a “big revolution” coming in the next three years due to central banks launching their own digital currencies.
After years of publicly mocking and ridiculing bitcoin, Nouriel Roubini has admitted that bitcoin may be a partial store of value.
Roubini teaches at New York University’s Stern School of Business and has his own economic consulting firm called Roubini Macro Associates. Famed for predicting the housing bubble crash of 2007-2008, his gloomy predictions have earned him the nickname “Dr. Doom” in the media.
Dr. Doom has been a long-standing critic of bitcoin. In a Senate hearing in October 2018, he called cryptocurrencies “the mother of all scams and bubbles.” He also said that the cryptocurrency world is a “stinking cesspool” and is fundamentally worth nothing.
However, Roubini may have changed his view about bitcoin, at least to a certain extent. During an interview with Yahoo Finance on Friday, he was asked what he thought of bitcoin now that it just had a bull run. After reiterating his stance that it is not a currency, Roubini said:
It may be a partial store of value because, unlike thousands of other what I call shitcoins, it cannot be so easily debased because there is at least an algorithm that decides how much the supply of bitcoin raises over time.
As for other cryptocurrencies, Dr. Doom said: “most of those other ones literally is done ad hoc, and they’re being debased faster than what the Fed is doing.”
Roubini also explained why he thinks that “cryptocurrency is a misnomer.” For something to be considered a currency, he described that it needs to be a unit of account, a single numeraire, a scalable means of payment, and a stable store of value that is not very volatile.
He claimed that bitcoin is not a unit of account because “Nothing is priced in bitcoin or any other cryptocurrency.” In addition, he said that it is not a numerator because there are many tokens, and it is not a scalable means of payment because you can only make five transactions per second, unlike with the Visa network where you can make 25,000 transactions per second.
As for the future of cryptocurrency as an asset class, he emphasized that in his view, “it’s not scalable, it’s not secure, it’s not decentralized, [and] it’s not a currency.”
Furthermore, he explained that many central banks are working on central bank digital currencies (CBDCs). When they are launched, every individual can have an account with a central bank where they can do payments from. When that happens, he said: “Not only you don’t need crypto, you don’t even need Venmo. You don’t even need a bank account. You don’t even need a check.” Dr. Doom elaborated:
The big revolution we’re going to see in the next three years is going to be central bank digital currencies. They’re going to be crowding out digital payment systems.
What do you think about Nouriel Roubini’s view? Let us know in the comments section below.
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Bitcoin fees plummet as mempool clears to zero
The Bitcoin network mempool shrank to its smallest size since mid-October this week after the network’s hash power soared.
The clear mempool meant that that thousands of stuck transactions pending confirmation were included in recent blocks, leaving very few unconfirmed transactions still outstanding.
The spike in hash power has been attributed to the re-activation of China-based miners who migrated from Sichuan after the end of the province’s rainy season. Bitcoin’s hash rate increased by 42% over a two day period, Nov. 9 and 10.
A smaller mempool is good news for regular Bitcoin users as it reduces competition among fresh transactions to get included in upcoming blocks. Reduced competition in the mempool helps to drive down Bitcoin transaction fees, as miners can potentially include all transactions in the mempool irrespective of their individual fee amounts.
Mempool cleared for the first time since October 20th in the weee morning hours. pic.twitter.com/JWMs3NsK7v
— (@murchandamus) November 10, 2020
Average Bitcoin transaction fees reached a peak of $13.16 per transaction on Oct. 30, when more than 140,000 transactions were pending in the mempool. The influx of new hash power over the weekend allowed Bitcoin blocks to be found faster than the benchmark speed of 10 minutes per block due to the network’s relatively low mining difficulty. This allowed miners to reduce the number of unconfirmed transactions to zero on Nov. 9.
As of this writing, there were approximately 6,000 transactions in the mempool with a median fee of 3 satoshis per byte (sat/byte) or roughly $0.11. Some users have reported fees as low as 1 sat/byte for transactions that have confirmed within a few hours.
Mining difficulty was expected to increase upon the next adjustment to account for the network’s increased hash power, which would mean the current respite from high fees may be short lived. However the hash rate is currently volatile and has dropped 37 EH/s in the past day.
The mempool has cleared. Send ’em if you got ’em.#Bitcoin pic.twitter.com/XDmDquaUzS
— Clark Moody (@clarkmoody) November 10, 2020
Bitcoin transaction fees had been comparatively low through the second half of 2020. During the last week of October, the price of BTC consolidated above the $13,000 mark for the first time since December 2017 — coinciding with a massive increase in transactions being sent to the mempool and resulting in a backlog of unconfirmed transactions.
With network activity subsiding over the course of a bullish week, Bitcoin users are being encouraged to take advantage of current conditions by performing transactions that may be too expensive to perform with higher fees, such as opening Lightning Network channels and consolidating inputs.
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NYU Professor Predicts CBDCs Are Imminent, Bitcoin Still Unviable
Central banks have been responding to the rise of Bitcoin with the introduction of central bank digital currencies, or CBDCs.
Thus far, movement on this front has been somewhat slow. Save for China, most central banks are still in the ideation phase, or are looking more into how a CBDC would affect their economy and their standing on a global scale. The U.S. Federal Reserve is moving especially slow, with Federal Reserve Chairman Jerome Powell seemingly signaling that the U.S. doesn’t need a CBDC at this time.
But Nouriel Roubini, an American economist that teaches at NYU Stern School of Business, says CBDCs are incoming. Bitcoin could benefit from, say some other analysts, though Roubini asserts that the leading cryptocurrency does not have much value at all.
Speaking to Yahoo Finance about his thoughts on the economy, Bitcoin, cryptocurrencies, and central bank digital currencies, Roubini recently stated that he thinks that CBDCs will go mainstream in the next three years:
His belief is that CBDCs are fundamentally better than Bitcoin due to them having a technological advantage.
Roubini believes that all cryptocurrencies are flawed, calling them not decentralized and having worst inflation rates than that of central bank currencies.
What’s ironic is that many think that the rise of CBDCs will actually benefit Bitcoin.
Raoul Pal, CEO of Real Vision and a retired hedge fund manager, recently said on Bitcoin’s currently outlook:
“It all looks like we are reaching this point. I have said this is where macro, crypto, politics, everything comes into the same big bucket. It is all concentrated and our pure focus right now. We know that Bitcoin plays a part in this.”
Core to his bullish sentiment is the rise of central bank digital currencies. He thinks that Bitcoin will act as a “life raft” that will allow investors to hedge their portfolios against the monetary inflation and the invasions of privacy caused by a CBDC.
This post was originally published on www.newsbtc.com
Bitcoin price outlook still bullish despite drop from COVID-19 vaccine news
The price of Bitcoin (BTC) has seen extreme volatility in the past 24 hours. After the Dow Jones Industrial Average abruptly rose by more than 800 points, BTC plunged in tandem with gold. Within five hours of achieving a four-day peak at $15,840, the dominant cryptocurrency abruptly plummeted 6.5%. Following the correction of BTC, analysts and traders remain divided on its near-future prospects.
The short-term pullback of Bitcoin, which happened within several hours, was beneficial for BTC for three key reasons. First, it neutralized the derivatives market, which is no longer overheated. Second, it led to a healthy rejection of the $16,000 resistance level. Third, it showed that even after a major price drop, overall buyer demand remains intact.
On Nov. 9, Bitcoin saw a sharp drop from $15,840 to $14,805, which occurred shortly after Pfizer announced its optimistic COVID-19 drug trial results, having tested nearly 44,000 individuals and demonstrated 90% effectiveness. Subsequent to the announcement by Pfizer, major U.S. stock market indices rallied by around 3%.
The highly anticipated breakthrough in the vaccine’s development caused Bitcoin and gold to rapidly drop. Capital flew out of safe-haven assets and stores of value to risk-on assets, like stocks, in a short period. Consequently, gold recorded an intraday 4.5% drop, which is rare for an asset of its size. It sparked the appetite for stocks and other risk-on assets, which gave Bitcoin whales a narrative to sell.
When Bitcoin initially started dropping, whale inflows into cryptocurrency exchanges began to increase. This meant that high-net-worth investors holding large amounts of BTC were selling. Since Bitcoin recovered back above $15,300 within six hours, whales likely bought back at a lower price. Based on the trend, it’s probable that whales used the narrative of the vaccine-induced correction to sell at resistance and buy at a lower price.
Speaking to Cointelegraph, Bitcoin technical analyst Eric Thies said that Bitcoin has essentially been fluctuating between two levels: the $14,500 support and $16,000 resistance. Bitcoin rejected heavily as it approached $16,000, indicating that there are large sell orders present at the $16,000 resistance area. If BTC sees some consolidation under $16,000, Thies noted that it would be beneficial for buyers:
“We’ve seen Bitcoin breaking previous 2019 resistances for almost two weeks now, and with price rapidly fluctuating between $14.5K and $16K, bulls are in need of a consolidation period before we rapidly accelerate towards hitting the 2017 high of $19,500.”
The short-term drop of Bitcoin was also critical to reset the futures market. Prior to the drop, the funding rate of BTC futures contracts across major exchanges was well over the average 0.01%. This meant that the vast majority of the market was heavily longing or buying Bitcoin. After the correction, the funding rate returned back to 0.01%, showing that the futures market is no longer overheated.
According to Ki Young Ju, CEO of CryptoQuant, the long-term prospect of Bitcoin remains positive. Ki told Cointelegraph that the exchange inflow mean shows the Bitcoin market is “still in a strong buy zone.” The exchange inflows show the amount of BTC that traders and investors are transferring to exchanges. When this figure remains low, it typically indicates lower selling pressure on exchanges.
However, Ki said that after Bitcoin’s drop, BTC inflows from whales have been spotted. While this is an ostensibly bearish trend, the analyst noted that whales tend to sell BTC regularly during bull trends. Since whales seek liquidity, they prefer to sell when the price is going up to ensure there is enough buyer demand in the market. Although the trend could be bearish, depending on one’s perception, Ki said it’s unlikely to be a market sentiment reversal, for now:
“After the price plunge, there have been subsequent exchange inflows by whales for two reasons. First, in the bull market: To sell it at the local high. They sell when the retail investors are active on exchanges. Second, in the bear market: To sell it if the unusual fear-sell happens. I would say we’re in the number 1 case. We still have a room till when retail investors are active on exchanges.”
Analysts and traders are generally echoing a similar stance in that large dips during Bitcoin bull trends are normal. Thies explained that he expects Bitcoin to achieve a new all-time high at $20,000 in January 2021 or February 2021. Still, Thies emphasized that large dips have always occurred during previous bull cycles. Even during the 2017 rally, when BTC neared $20,000, BTC saw several short-term 20%–30% drops.
If Bitcoin continues to consolidate with decent momentum, Thies said buyers are safe from a major drop. Unless BTC sees a lower low formation, which occurs when BTC drops below the most recent bottom, the technical analyst said BTC could avoid a deep correction:
“At this point, I see BTC hitting $20K in January or February, which will mark the actual start of the new ‘crypto bull run’, BUT, expect a dip to as low as $12.8K at some point prior. Bulls will benefit from any consolidation or periods like this, as it keeps the market from over buying too early. Bulls are technically ok until we see a lower low, which at this point would be near even $11.5K but that’s a low probability of happening it seems.”
Various on-chain data metrics show that both miners and whales have been selling BTC. The Miners’ Position Index on CryptoQuant hit a yearly high on Nov. 5, indicating rising selling pressure from miners. Yet, the price of Bitcoin has stayed relatively stable above $15,000 throughout the past week, apart from several days.
This trend shows that new buyer demand is offsetting the selling pressure coming from whales and miners. According to analysts at Santiment, around $365 million worth of Tether (USDT) has moved to exchanges daily in the last seven days. Since most of the sidelined capital within the crypto market is stored in stablecoins, it suggests that new buyers are entering the market.
In the short term, however, one concerning metric that could cause Bitcoin to consolidate for longer is the relative unrealized profit/loss indicator. Philip Swift, the creator of educational platform Look Into Bitcoin, said BTC is hovering in the “greed” zone on the indicator, which, basically, measures how much unrealized profit investors currently hold.
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