Nobel Prize-winning economist Eugene Fama foresaw a 100% probability that Bitcoin BTC/USD, the world’s largest cryptocurrency, will lose all of its value within the next decade.
What Happened: During an interview on the Capitalisn’t podcast, the “father of modern finance” was asked about the likelihood of Bitcoin’s value plummeting to zero in the next 10 years, to which he replied, “I would say it’s close to one.”
Fama stated that cryptocurrency runs against all that is known about monetary theory.
Fama’s doubts about cryptocurrencies were rooted in their inherent instability. He argued that they contradict the essential principles of a medium of exchange due to their fluctuating real value.
“They don’t have a stable real value, you know. They have highly variable real value. That kind of a medium of exchange is not supposed to survive,” Fama said. “People don’t want to do business in something that itself can put them out of business.”
The pioneer of the efficient market hypothesis also criticized the energy-intensive method of mining, responsible for bringing new Bitcoins into circulation.
“It’s really not sustainable. You can’t have a whole financial system built on this because it requires too much in the way of computing power,” Fama argued.
The gloomy prediction comes after a record-breaking year for the leading cryptocurrency that saw it reach all-time highs of $109,000 and more than double its market value.
See Also: Elon Musk Says Treasury Officials ‘Breaking The Law Every Hour’ By Approving Fraudulent Payments — DOGE Lead Wants A Blockchain Fix
Why It Matters: Fama’s prediction follows similar skepticism by well-known economists toward Bitcoin.
Nobel laureate Paul Krugman called Bitcoin “economically useless” last year in July, questioning President Donald Trump’s embrace of it while he was on the campaign trail. He even referred to Trump’s proposal for a national Bitcoin stockpile as a “government bailout” of a scandal-ridden sector.
Another influential economist, Justin Wolfers, questioned the feasibility of a national Bitcoin stockpile, indicating a growing doubt about the economic viability of Bitcoin.
Notably, Trump signed executive orders, evaluating the creation of a “strategic national digital assets stockpile.”
Price Action: At the time of writing, Bitcoin was exchanging hands at $94,421.46, sinking 5.31% in the last 24 hours, according to data from Benzinga Pro.
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