Bitcoin Under Fire: Economist Questions Its Fundamental Value
Renowned economist Steve Hanke from Johns Hopkins University has once again criticized Bitcoin (BTC), emphasizing its lack of intrinsic value. In a post shared on December 16, Hanke reiterated his belief that Bitcoin’s volatile nature makes it a speculative and unreliable investment asset.
“Bitcoin lacks any fundamental value,” claimed Hanke. Known for his long-standing skepticism, the professor argued that cryptocurrency’s price instability disqualifies it as a legitimate means of currency or a dependable store of value.
Why Hanke Says Bitcoin Fails
Hanke asserts that Bitcoin’s frequent price rallies are unsupported by tangible fundamentals, labeling these spikes as “irrational flights into fantasy.” This contrasts sharply with Bitcoin enthusiasts who promote it as “digital gold” or a hedge against inflation. Instead, the economist paints it as a speculative bubble prone to bursts.
Beyond technical criticisms, Hanke has also called out policy measures like the establishment of a U.S. Bitcoin reserve. In his opinion, diverting funds to cryptocurrency does not spur economic growth but, rather, detracts from essential infrastructure initiatives and job creation efforts.
Notably, Hanke has also cautioned countries like El Salvador, which has adopted Bitcoin as legal tender. He warned that such national-level adoption may destabilize economies and further fuel inflationary pressures.
Impact of Bitcoin’s Current Market Trends
Hanke’s concerns align with recent market trends. Over the past month, Bitcoin prices have declined significantly, dropping nearly 4% in a single day to $85,000. The cryptocurrency is now down over 30% from its historic high of $126,000 reached earlier this year. Factors such as global macroeconomic uncertainty, central bank interest rate potential changes, and thin holiday trading volumes have exacerbated this downward spiral.
Additionally, warnings from the Federal Reserve about a possible contraction in the broader crypto market further weigh on investor sentiment. Analysts are projecting a potential $3 trillion sector contraction if negative market momentum persists into 2026.
Should You Still Invest in Bitcoin?
While Bitcoin maintains its allure as a speculative digital asset, it’s essential for investors to evaluate the risks carefully. For those interested in less risky investments within the cryptocurrency space, regulated platforms like eToro offer options for crypto trading alongside stocks, ETFs, and precious metals. eToro allows fractional investments starting from as little as $10, making it suitable for those wanting to test the waters without significant financial exposure.
Remember, cryptocurrency investments are inherently high-risk. Ensure careful research and diversify your portfolio before investing.
