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The Crypto Edition: Why bitcoin is 'the biggest bubble in human history' and lessons from the cryptocurrency roller coaster

American economist Nouriel Roubini was dubbed Dr. Doom because of his gloomy predictions for the world economy. He correctly predicted the 2008 collapse of the U.S. housing market and the subsequent global recession.

Fred Lum/Fred Lum/The Globe and Mail

"Dr. Doom" isn't mincing his words when it comes to the crypto boom and bust.

Nouriel Roubini of Roubini Macro Associates said Bitcoin is the "biggest bubble in human history" and this "mother of all bubbles" is finally crashing, in an interview with Tom Keene and Francine Lacqua on Bloomberg Television. Bitcoin dropped below $8,000 Friday, a 60 percent tumble from its peak of $19,511 on Dec. 18.

It isn't just Bitcoin, Roubini added. There are more than 1,300 cryptocurrencies or initial coin offerings, and "most of them are even worse" than the largest digital token. These constitute a "a bubble to the power of two or three," he said.

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Blockchain has "been around for 10 years, and the only application is cryptocurrencies, which is a scam," the New York University economist added.

In another salvo aimed at crypto bulls, Bitcoin is an "environmental disaster," he said, citing its soaring energy costs.

Joanna Ossinger from Bloomberg News reports.

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The Rundown

OSC approves Canada's first blockchain ETF

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As the price of bitcoin continues to tumble, exchange-traded fund providers are looking to the underlying blockchain for value as two more providers file plans with regulators to join the sector while Harvest Portfolios gets the green light to launch Canada's first blockchain ETF. Last month, Harvest Portfolios filed a preliminary prospectus with regulators to introduce an ETF that tracks blockchain technologies. Last week, the firm received approval by the Ontario Securities Commission to launch the country's first blockchain fund – Blockchain Technologies ETF. With the ticker HBLK, the fund has a management fee of 0.65 per cent and seeks to replicate the performance of the Harvest Blockchain Technologies Index; an index designed in-house to track the performance of issuers in both the large-cap blockchain segment and the emerging blockchain segment exposed to the development and implementation of blockchain technologies in North America. The fund began trading this week on the Toronto Stock Exchange. Clare O'Hara reports.

Investing lessons from the cryptocurrency roller coaster

With the price of bitcoin and other cryptocurrencies plummeting, behavioural finance can help us understand both the lead-up to the digital currency craze and the way speculators are responding to their new-found losses. Financial economists have been cautioning for months (and in my own case, years) that cryptocurrencies such as bitcoin were in the throes of a bubble. Not everyone heeded the warnings. There was rampant conflicting advice, making for confusion. Lisa Kramer takes a look at the behaviour behind the bitcoin bubble.

Cryptocurrency cynics stand to profit the most

Thanks to the invention of cryptocurrency, there's a whole new way for you to lose your life's savings. Plunges in the value of cryptocurrencies like Bitcoin and Ethereum have sent about $400-billion of paper wealth vanishing into thin air. Since its peak, Bitcoin has lost about $200-billion in market capitalization, and Ethereum about $67-billion. If you've owned cryptocurrency for a long time, the big price drop hasn't hit your net worth very hard -- Bitcoin's price is back to the same level as in November, while Ethereum is still up a good deal since that time. But that $400-billion of evaporated wealth had to have hurt a lot of people. Noah Smith from Bloomberg reports.
 

Others

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Winklevoss twins say increased regulation is bullish for bitcoin

Canadian blockchain ETF launches amid bitcoin volatility

Canada's banks allow credit-card crypto purchases - for now

Banks in Britain, U.S. ban bitcoin buying with credit cards

Securities regulators seek Google ad ban on cryptocurrencies, initial coin offerings

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Compiled by Gillian Livingston

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