© Reuters
Investing.com – Renowned economist Paul Krugman says the price could fall in favor of gold this year, saying cryptocurrency scandals are tarnishing confidence in digital assets.
In an op-ed published in The New York Times last Friday, the Nobel Prize-winning economist noted that precious metal prices have been much more stable than bitcoin’s in 2022.
He further recalled that cryptocurrencies have been kept afloat by a combination of fan enthusiasm for its advanced technology and a libertarian approach to money, factors that are no longer really relevant.
“But investors are losing faith in trendy technobabble,” he wrote.
“They still want their pet rocks, but crypto plunges and scandals are causing some of them to revert to pet rocks with centuries of tradition behind them — that is,” he said. -he explains
Note that Krugman was referring here to recent comments by Jamie Dimon, CEO of JPMorgan (NYSE:), who described cryptocurrencies as company rocks because they cannot be used as a medium of exchange and emphasize their useless according to him.
Referring to the forecasts of several major banks, which last year believed that Bitcoin could be a competition for Gold, Krugman wondered: “Is it possible that the exact opposite has happened?” , he asked in the editorial.
“After all, bitcoin has lost more than two-thirds of its value since peaking in late 2021, and many high-profile stocks like Tesla (NASDAQ:) have fallen out of favor, but gold has held on, its price current being just a few percent off its 2020 peak,” Krugman pointed out.
He also believed that investors are turning to gold at the expense of BTC in part because the cryptocurrency sector has been rocked by high-profile collapses, according to Krugman, who notably mentioned the resounding bankruptcy of FTX.
He also noted that precious metals prices are surprisingly robust given the rising rate environment, when in theory high interest rates should lower demand for gold because people are more attracted to other investments whose performance is directly linked to the level of interest rates, such as bonds.