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Will Bitcoin fall to zero after a “death spiral”, this economist thinks so

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Joining a list of Bitcoin skeptics Professor of applied economics at John Hopkins University, John Hanke argued that Bitcoin’s continued rally was driven entirely by a herd of speculators. According to reports, Hanke highlighted that Bitcoin’s fundamental value is zero because it doesn’t pay interest like most fiat monies.

According to him, “Bitcoin doesn’t pay interest that’s why you can say unambiguously that it has a fundamental value of zero.”

He goes on to say that its market value is entirely based on what market participants are putting on it, and that and fundamental value are two entirely different things.

“It’s obviously a highly speculative thing, it’s very volatile and that gets into the fact that it is not a currency because it’s not a stable unit of account.”, says Hanke, who believes that ultimately it will approach its true fundamental value of zero after going into a “death spiral”.

The professor considers comparisons between Bitcoin and gold to be a “joke” and he believes that comparisons of this nature actually harm the reputation of the golden constant.

Earlier this month, a prominent investor and long-term gold advocate Jeffrey Gundlach said that he had changed his stance on Bitcoin and gold.

According to him, for investors looking for an inflation hedge, Bitcoin may be a better investment than gold. Gundlach’s opinion was shared by another renowned investor, Ray Dalio of Bridgewater Associates.

In a paper titled ‘What I think of Bitcoin’, Dalio said that the digital asset had established itself as a “gold-like asset alternative”

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Samyuktha is a full-time journalist at AMBCrypto. Currently pursuing her Masters in Finance and Business Analytics, she is interested in cryptocurrencies, fintech, and blockchain technology adoption across various sectors.