Bitcoin biggest bubble in history, says economist who predicted 2008 crash

Nouriel Roubini calls cryptocurrency the 'mother of all bubbles' as it falls below $8,000

The economist credited with predicting the 2008 global financial crisis said a 12% fall in the value of bitcoin on Friday was the latest proof that the cryptocurrency was the biggest bubble in history and destined for a crash.

Nouriel Roubini, professor of economics at New York University, said bitcoin was "the mother of all bubbles" favoured by "charlatans and swindlers" as it fell below $8,000 (5,600) early on Friday, marking a 30% drop since the beginning of the week as investors became increasingly twitchy about a clampdown on cryptocurrencies by regulators. Later it rallied, climbing back over $8,600 by 3pm (GMT).

Bitcoin is the first, and the biggest, "cryptocurrency" - a decentralised tradable digital asset. Whether it is a bad investment is the big question. Bitcoin can only be used as a medium of exchange and in practice has been far more important for the dark economy than it has for most legitimate uses. The lack of any central authority makes bitcoin remarkably resilient to censorship, corruption - or regulation. That means it has attracted a range of backers, from libertarian monetarists who enjoy the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it is hard (but not impossible) to trace a bitcoin transaction back to a physical person.