Nobel laureate Eugene Fama warns of potential Bitcoin collapse
Eugene Fama, winner of a Nobel Prize in Economics in 2013, expressed serious concerns about Bitcoin’s future in an episode of the Capitalisn’ t podcast. He said the cryptocurrency’s inherent flaws make it a risky investment and that a collapse in value is imminent.
Fama, known as the ‘father of modern finance’, argued that the lack of intrinsic value makes Bitcoin fundamentally unsustainable. Unlike traditional currencies backed by governments and central banks, Bitcoin depends solely on market demand. He warned that if demand declines, the price could fall to zero.
The Nobel laureate pointed out that Bitcoin’s supply is fixed, meaning its price is determined entirely by buyer interest. Without the backing of a central authority, Bitcoin’s value is speculative and vulnerable to shifts in sentiment.
Despite recent gains and increased popularity, including Donald Trump’s use of cryptocurrency, Fama maintained that Bitcoin lacks legitimacy and real value. He said that any perceived legitimacy was superficial and did not change the fundamental nature of Bitcoin as a speculative asset.
Fama even expressed hope that Bitcoin would collapse, stating that it would force economists to reevaluate monetary theory if it continues to thrive without intrinsic value. This stark warning comes amid recent losses by inexperienced crypto investors and highlights the risks involved in investing in volatile assets like Bitcoin.
While Bitcoin remains popular and attracts both institutional and retail investors, Fama’s cautionary message serves as a reminder of the potential dangers. Bitcoin’s future remains uncertain, but his concerns raise serious questions about its long-term viability.
Cryptocurrencies have come in for criticism recently over so-called ‘memecoins’ – currencies based on a single person, idea or social movement. Last month US President Donald Trump launched his second cryptocurrency, Offical Trump, which opened at $75.35. The coin has since lost more than 78% of its value and at time of writing was trading at $15.85 per coin. ‘Hawk Tuah girl’ Hailey Welch came to prominence last year after an on-street video clip of her went viral. In December she launched the token ‘Hawk’. Initially valued at $490 million, the token’s value dropped by $440 million within 20 minutes and Welch disappeared from public view for two months.
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