Economist Labels Bitcoin As Bubble Asset Amid Recent Gains

According to U.Today, Robin Brooks, former chief economist at the Institute of International Finance, maintains his stance that Bitcoin is merely a bubble asset, despite the significant gains recently observed in the cryptocurrency. Brooks attributes the recent rally to an interest rate cut by the Federal Reserve, dismissing the surge as a temporary effect rather than a sign of Bitcoin's inherent value. Brooks has previously stirred controversy among Bitcoin enthusiasts by asserting that the cryptocurrency offers no diversification benefits or yield, and cannot function as a reliable store of value. His comments have sparked backlash, especially after Bitcoin nearly reached a new record high, prompting supporters to revisit his 2023 social media post. Despite the criticism, Brooks stands by his original statement, clarifying that it was not intended as a prediction of Bitcoin's price direction. Bitcoin experienced a sharp decline in 2022 following aggressive interest rate hikes by the Federal Reserve aimed at controlling inflation. However, the cryptocurrency saw a resurgence in early 2024, reaching new highs driven by the ETF boom. The Federal Reserve's first rate cut since 2020, implemented in September, further boosted the prices of risk assets, including Bitcoin.