New Delhi: Nouriel Roubini, chairman of Roubini Macro Associates and the economist who, in 2006, predicted the collapse of US' housing market and worldwide recession, has taken to Twitter to call bitcoin the "biggest bubble in human history".
Roubini backed his claim by showing a graph of bitcoin's historic run, as compared to others such as the infamous tulip bulbs.
"Now bitcoin crashing below 8000, headed towards 7000. Down 60% from the peak, 40% in a month and over 10% today. The Mother of All Bubbles and Biggest Bubble in Human History Comes Down Crashing," he wrote on the micro-blogging site.
Nicknamed "Dr Doom", Roubini in 2006 made an address to the International Monetary Fund (IMF) in which he predicted that, among other things, the US economy was at risk of a housing bust and deep recession that would have dire consequences for the rest of the world.
On Friday, cryptocurrencies plunged, with bitcoin at one point sliding below $8,000 and headed for its biggest weekly loss since December 2013, amid worries about a regulatory clampdown globally.
The currencies had come off their lows but analysts said the sell-off was probably not over.
Last week's slump brought the total market value of cryptocurrencies down to around $400 billion, half the high it reached in January, according to industry tracker Coinmarketcap.com. The market value of cryptocurrencies is calculated by multiplying the number of digital coins in existence by their price, although many question whether that is the right way to value them.
Bitcoin, the biggest and best-known cryptocurrency, fell as much as 15 percent on Friday to a two-month low of $7,625 on the Luxembourg-based Bitstamp exchange. It clawed back some losses and was down around 5.6 percent at $8,498 in late New York trading.
The virtual currency is down by close to 25 percent this week and almost 40 percent in 2018. It surged more than 1,000 percent though in 2017.
"Bitcoin has become, and will continue to be, primarily a speculative asset class," said David Moskowitz, Co-founder and Director of Indorse, the decentralized social network for professionals.
He added that the recent drops in transaction fees have made it easier to use bitcoin for payments once again. And if a payment solution can help the congestion, bitcoin may once again become an effective payment network, Moskowitz said.
The second and third largest virtual currencies, Ethereum and Ripple, also plunged more than 20 percent at the session low, Coinmarketcap.com said. Ethereum was last down 13.2 percent, at $888.22, while Ripple last traded at 83 US cents, down 14.7 percent.
Retail investors have poured money into digital coins, enticed by the huge run-up in prices. Regulators say cryptocurrencies are highly speculative and dangerous investments.
On Thursday, India vowed to eradicate the use of crypto-assets, joining China and South Korea in promising to ban parts of the nascent market where prices have boomed in recent years.
Social media website Facebook said this week it would ban cryptocurrency advertisements because many were associated with misleading or deceptive promotional practices. US regulators have sent a subpoena to two of the world's biggest cryptocurrency players, Bitfinex and Tether
A massive $530 million hack of a Japanese cryptocurrency exchange last week renewed worries about the security of the industry.
Critics of virtual currencies have called the run-up in prices a speculative bubble, but supporters of cryptocurrencies say short-term price volatility is to be expected, and the blockchain technology underpinning these assets maintains its power and value.
Going back to 2011 and including the current selloff, bitcoin's price has been halved nine times on the Bitstamp exchange before recovering. The last time was from November 2014 to January 2015.