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Nouriel Roubini, professor of economics at New York University's Stern School of Business and CEO of Roubini Macro Associates joined Yahoo Finance to discuss his thoughts on bitcoin.

JULIA LA ROCHE: Welcome back to Yahoo Finance Live. We are joined now by Nouriel Roubini, NYU professor of economics at NYU's Stern. Nouriel, always great to have you on.

We'd like to share some breaking news that's just coming across. We're getting some headlines that President Trump has defied Congress and has vetoed the bipartisan defense policy bill. In some comments, Trump called the defense policy bill a, quote, gift to China and Russia.

And, of course, I know you're someone who does look at geopolitical events. And we are shaping up for a new administration in 2021. Your reaction to this news that's just crossing.

NOURIEL ROUBINI: Well, you know, I mean the president is becoming unhinged on everything. He's literally trying to do a military coup, following the advice of Mike Flynn and others, in order to subvert the results of the election.

He doesn't want to pass the stimulus bill. And if he doesn't, we may end up in a government shutdown. And now, he's accusing the defense bill of things that don't make any sense, you know. He has even denied that this major hack attack came from Russia. He claims that it came from China without any base. And if there is anything that actually can help us to push back against our strategic rivals, whether Russia or China or North Korea or Iran, it's going to be this defense bill.

So, literally, the guy is becoming completely unhinged across the board. It's just politics. Maybe he's trying to prepare himself to run again in 2024. Maybe he's losing his marbles. I don't know what's going on. But pretty much everything he's doing, it doesn't make any sense.

ADAM SHAPIRO: Nouriel--

JULIA LA ROCHE: Nouriel-- go ahead, Adam. You go ahead.

ADAM SHAPIRO: Go Julia. It's all you, Julia.

JULIA LA ROCHE: Well, I would like to shift the conversation, and thank you so much for sharing your thoughts on that, to cryptocurrency. Of course, Bitcoin. I think the last time we had you on, you got quite a bit of attention.

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I'm just looking at Bitcoin's price now. It's above $23,500. And you put out a tweet that Bitcoin has no place in an institutional investor or retail investor's portfolio. Yet we continue to see big name institutional investors kind of flood the space. Paul Tudor Jones, for example. Even Anthony Scaramucci. And then, we're also seeing the retail investors. Why does it not deserve a place in a portfolio?

NOURIEL ROUBINI: First of all, calling it a currency is not a currency. It's not a unit of account. It's not a means of payment. It's not a single [? numerator. ?] It's not a stable store of value.

Secondly, it's not even an asset. Either an asset has both income, use, and capital gain, like bonds, like stocks, like real estate. Or like in the case of precious metals, they don't give you an income. But gold gives you industrial use, it gives you [INAUDIBLE] as jewelry, and as a capital gain. While in the case of Bitcoin, there is no income, there is no use, there is no utility.

The only thing is a speculative self-fulfilling kind of rise. And that rise is driven totally by manipulation. There's been an academic study suggesting that these pseudo stable coin Tether is being created by fiat. This year alone, the increase in the supply of Tether has been another $16 billion out of the initial 4. So, it's 20. And every time the price of Bitcoin goes down, literally overnight they issue more of this Tether that is used literally to manipulate the price of Bitcoin.

So, the price of Bitcoin is totally manipulated by a bunch of people, by a bunch of whales. It doesn't have any fundamental value. And like in 2017, when it went from 1,000 to twice that, and then in '18 it crashed from 20,000 down to 3,000, I think we are close to the point in which this hyperbolic bubble is going to go bust. And it's going to go bust because law enforcement authorities are having an investigation of Tether and of the company behind it.

And in my view, like in the case of BitMex that was the biggest scam and criminal derivative cryptocurrency house has being indicted, you can have an indictment of those who are behind Tether. When that's occurring in the next few months, there will be a crash of Bitcoin and all of the other cryptocurrencies. They're not even currencies. They are shit coins.

ADAM SHAPIRO: Nuriel, I want to break this down in several parts. Because I think a lot of investors with Bitcoin at over $23,500 today need to pay attention. Why would there be, I'll call it a contagion, if the feds crack down on that other crypto, to Bitcoin? And how do you look at the fact that central banks worldwide are looking at creating digital currencies? Are they different than what we see with the Bitcoins and the other cryptocurrency is already out there?

NOURIEL ROUBINI: Well, there are several academic studies, including one by the University of Texas, that showed that every time the Bitcoin prices are weakening, there was an issuance of this Tether. There is literally a stable coin created out of Fiat. There has been no update that these cryptocurrencies are backed by any assets. And it's just printed by fiat used to buy Bitcoin. So, it's actually total price manipulation.

There's plenty of evidence that there are other schemes of manipulating cryptocurrency. There are pump-and-dump schemes, hundreds of channels on Telegram or on WhatsApp that is frontrunning, that is wash trading. Pretty much anything that is being done for penny stock is done for crypto and Bitcoin to the power of 10. That's a totally manipulated market. It's not driven by fundamentals. It's driven by insiders, by criminals, by whales, by scammers. That's the reality and there is evidence on it. And that's why there are criminal investigations that are going to reach their climax in the next few months.

Secondly, central banks are going to introduce digital currencies. But, first of all, these digital currencies will have nothing to do with crypto or blockchain. Today, every private commercial bank has a bank account with the Fed. We, as individuals, are [? non-corporational ?] are non-financial. We don't have access to the balance sheet of the Fed.

Suppose that tomorrow we have access to the balance sheet of the Fed. That's what a central bank digital currency means. It's not digital money. Digital money already has existed for decades. We have bank accounts, we have wire transfers, we have AliPay, we have WeChat Pay, we have Venmo. We have all sorts of other digital payment system.

So, what's new is not that it's going to be digital. There are thousands of digital payment systems that work all over the world. It's that we don't have a situation where individuals like you and me have access to the balance sheet of the Fed. Once we do, we don't need to have a bank deposit for making cheap, fast, instantaneous transactions that our payment system then clears and settled instantaneously. So, once we have a central bank digital currency, not only crypto-- this junk, these shit coins that don't have any payment use. But even other digital payment systems like bank deposit or Venmo and PayPal are going to be dominated by central bank digital currency. And this scheme technologically has nothing to do with crypto, has nothing to do with blockchain. It's going to be centralized. It's going to be permissioned. It's going to be a system that is going to be private, not on a public decentralized ledger.

So, calling it crypto is not true. It's a central bank digital currency. It's going to revolutionize payment systems and is going to destroy any pseudo cryptocurrency that is not a cryptocurrency and is not a currency.

The people don't know what they're talking about when they're talking about central bank digital currency. They get excited. They say even central banks are going to crypto. Just the opposite. They don't know what they're talking about.

JULIA LA ROCHE: Nouriel Roubini, professor of economics at NYU's Stern and CEO of Roubini Macro Associates. Always a pleasure to have you on. Wish you a happy holiday season. And thank you, again.

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The price of bitcoin is 'driven by manipulation': Nouriel Roubini - Yahoo Finance

The founder and chairman of Equity Group Investments Sam Zell says he is sceptical of bitcoin but concedes that it may be part of the solution. In particular, the billionaire and real estate magnate thinks the bitcoin community is composed of many individuals that he is not fond of.

In remarks made during an interview, the billionaire, who predicts that the U.S. dollar will lose its status as the worlds reserve currency within the decade, has no kind words for some unnamed individuals in the bitcoin space. A report quotes Zell remarking:

I am very sceptical, frankly, of bitcoin. Ultimately, it may be the answer or one of the answers. But right now, its a world thats extraordinarily populated by chameleons and other fast-talking characters. I dont believe everybody involved in it are the kind of people Id like to follow.

Although the billionaire does not explain how BTC can be one of the answers, the same interview, however, does provide some hints as to why Zell thinks so. When talking about the possibility of the U.S. dollar losing its reserve status, Zell warns:

If we keep doing what we are doing right now, I think it is 10 or 15 years away. If we lose the reserve status, I could see a 25% reduction in our standard of living.

Meanwhile, other individuals and organizations including the International Monetary Fund (IMF) seem to share the billionaires sentiments on the U.S. dollars future status. The IMF says central banks now need to think about the possibility of replacing the dollar with other alternatives which include digital currencies.

However, for his part, Zell warns of the disastrous consequences ahead if the tradition of unlimited debt and irresponsible activity does not end. Many analysts including bitcoiners see the excessive borrowing and printing of money as the prime cause of the U.S. dollars depreciation. The resulting diminished dollar value then forces some investors to seek and invest in inflation resistant assets. Bitcoin is proving to be one such asset.

What do you think of Zells bitcoin remarks? Tell us what you think in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

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Real Estate Billionaire Sam Zell Skeptical of Bitcoin but Says 'It May Be the Answer or One of the Answers' | Featured - Bitcoin News

Bitcoin's record rally could hit a wall in 2021.

Signs in the cryptocurrency's technical chart point to a 25%-30% sell-off that's likely to hit early in the new year, Miller Tabak chief market strategist Matt Maley told CNBC's "Trading Nation" on Thursday.

Bitcoin broke above the $23,000 level for the first time on Thursday, building on a massive, 215% year-to-date rally.

"There's no question it's been a melt-up, and it could last a little bit longer," Maley said. "I think on a short-term basis it could continue a little bit longer, and I'm very bullish on it on a very long-term basis. But intermediate term, I'm a lot more concerned than I think a lot of other people."

Part of the problem is the market's excess liquidity, Maley said. Over the summer, that sideline money fueled the mega-cap tech rally; now that those stocks have stabilized, it's driving bitcoin, he said.

"The problem is it's now taken the weekly [relative strength] chart on bitcoin to a very, very high level," he said.

"It's above 88 [as of Thursday]. That's not quite up to the 90 level that it reached twice in 2017, but those were followed by declines of 36% and 64%," he said. "We're not quite there yet, ... but as the pandemic starts to fade a little bit [and] maybe that liquidity becomes a little less plentiful, this stock could get clobbered like it has many other times in the past."

He noted that just since 2016, bitcoin has seen 10 declines of 20% or more, seven declines of 30% or more and four declines of 48% or more, adding that investors shouldn't underestimate its pattern of volatility.

"People need to be careful as we move into the new year," he said. "I love it long term, but I think it's going to be a much deeper sell-off than the 10%-15% ones we've seen more recently. I think you're going to see 25%-30% easily. Again, I don't think that really starts until early in the new year, but I do think it's coming soon ... based on this overbought condition and the froth that we've seen in this asset class in the last week or two."

Michael Bapis, managing director of Vios Advisors at Rockefeller Capital Management, said he would suggest holding on for the long term, volatility and all.

"It took me a little while to get on this train, but I think it really is the new currency," he said in the same "Trading Nation" interview. "If you have that long-term perspective, three-, five-, seven-year perspective, you just hold onto it."

Bitcoin has become a global currency, a hedge against inflation and something of a "new commodity" in this market environment, Bapis said, comparing its triple-digit rise this year with gold's 24% gain.

"Lastly, it's become a part of a balance sheet reserve for some of these big companies," he said. "PayPal is now accepting bitcoin as a global currency ... starting in 2021. Square has made a massive investment into bitcoin, and it's also using bitcoin for its reserve on the corporate balance sheet. ... Blockchain, we all know that that's the real technology and it's here to stay, and I do believe bitcoin is a leader in the global currency, cryptocurrency side of this for as far as we can see."

"Ijust think you own it and put it away for a long-term investment and watch how it maybe transforms the currency and the world we live in today," Bapis said.

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Bitcoin could see a 25%-30% sell-off in the new year, but it's still a long-term buy, trader says - CNBC

Bitcoin has broken fresh ground this week, climbing above $20,000 per bitcoin for the first time ever and grabbing global attention again three years after bitcoin's 2017 boom and subsequent bust.

The bitcoin price is up around 30% over the last month, adding to gains of more than 200% since Januaryand pushing up other top five cryptocurrencies by value ethereum, Ripple's XRP, and litecoin.

Ethereum, Ripple's XRP, and litecoin, some times known as alt coins, have all soared by more than 30% over the last 30-day period, with the likes of smaller cryptocurrencies cardano, NEM and stellar making even bigger gains.

The bitcoin price has shot above $20,000 this week, climbing as high as $23,780 on the ... [+] Luxembourg-based Bitstamp exchange before falling back slightly.

"While bitcoin has largely dominated the narrative, I believe investors should look to alt coins who have tremendous amounts of development in both the core technology and usership, yet are still a fair way off their all-time highs," Nicholas Pelecanos, head of trading at NEM, which developed NEM's XEM digital token, said in emailed comments.

"Does this leave these alt coins undervalued against bitcoin? I believe it does and am expecting to see the price of these alt coins, such as ethereum and XEM, rally hard when the bitcoin price inevitably slows down."

Many smaller cryptocurrencies are closely tied to the bitcoin price, with moves higher and lower triggered by bitcoin developments and sentiment. However, alt coins often swing by much bigger percentages, often losing or gaining double and even triple digit percentages in mere days.

Cardano, a top ten cryptocurrency, has added around 70% over the last month. Two top 20 cryptocurrencies, NEM and stellar, have more than doubled in price over the last 30 days, as bitcoin puts cryptocurrencies back in focus.

Bitcoin's reputation as digital gold has grown this year, gaining as investors fret over the possibility of increased inflation and helped on by a number of big-name investors who have publicly named bitcoin as an emerging inflation hedge.

Bitcoin's jump higher this week came after news fund manager Ruffer Investment Management moved around $750 million of its clients' money into bitcoina move designed to "primarily a protective move for portfolios" to "act as a hedge" against "some of the risks that we see in a fragile monetary system and distorted financial markets," a Ruffer spokesperson told bitcoin and crypto news website Coindesk.

Ahead of bitcoin's surge over $20,000, many smaller cryptocurrencies, such as ethereum and XRP, were already soaring as investors eyed technical developments and token giveaways.

XRP, a digital token developed by Ripple, made huge gains through November ahead of a hotly-anticipated giveaway of a new cryptocurrency, known as an airdrop. Ripple controls around 60 billion of the 100 billion XRP tokens that will ever be created.

The XRP price has fallen back slightly since it peaked late last month but its currently up by around 90%.

The bitcoin price has surged to fresh all-time highs this week, climbing well above $20,000 per ... [+] bitcoin after brushing the psychological barrier three years ago.

Meanwhile, ethereum, the second-largest cryptocurrency after bitcoin, is up by 32% over the last 30 days. Investors began piling into ethereum over the summer amid a surge of interest in decentralized finance (DeFi)using crypto technology to recreate traditional financial instruments such as loans and insurance.

Ethereum's blockchain is used as rails by many DeFi projects and some investors think the ethereum price will benefit as DeFi's popularity rises. Ethereum was given a further boost by the closely-watched launch of ethereum 2.0 last month.

Litecoin, some times known as the silver to bitcoin's gold, has this week climbed to its highest price since for 16 months, up around 40% on its price 30 days ago. However, litecoin is still far from its all-time highs set in late 2017, down some 75%.

The bitcoin and cryptocurrency community has been quick to talk up bitcoin's 2021 prospects despite its recent sky-high gains, with many pointing to PayPal's PYPL recent support of bitcoin and a handful of other cryptocurrencies and similar digital infrastructure development as potentially supporting the bitcoin price going forward.

"We are only in phase one of the bull-run," Pascal Gauthier, the chief executive of France-based bitcoin and cryptocurrency physical wallet maker Ledger, said via email. "Many big players are investing time and resources to build or buy digital asset infrastructures needed to support the swell of institutional and retail adoption."

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Massive Bitcoin Gains Are Being Dwarfed By Ripples XRP, Litecoin, Ethereum And These Minor Cryptocurrencies - Forbes