Krugman’s Warning: Tesla, Bitcoin, and Real Estate Bubble Comparisons1. January 2023
• Nobel Laureate Paul Krugman has compared the cryptocurrency craze to the real estate bubble of the mid-2000s and Tesla stocks.
• Last Tuesday, Krugman wrote an opinion piece in the New York Times regarding the similarities between Tesla, Bitcoin, and their massive market prices.
• Tesla’s stock has dropped 73% since January 2020, reducing the company’s market valuation from almost $1.2 trillion to just under $350 billion.
Nobel Laureate Paul Krugman has recently joined the ranks of the world’s leading intellectuals and business moguls to express his disapproval of cryptocurrencies. Last June, the prominent American economist drew parallels between the cryptocurrency craze and the real estate bubble of the mid-2000s, stating that consumers’ enthusiasm in crypto assets is comparable to their confidence in the US home market prior to its collapse.
Fast forward six months, and Krugman has now compared the crypto to Tesla and its stocks. On Tuesday, he wrote an opinion piece in the New York Times regarding the similarities between Tesla, Bitcoin, and their massive market prices. In his article, he inquired: “Did the Tesla story ever make sense?” He went on to add: “Tesla and bitcoin may have more in common than you think.”
Krugman’s comments came shortly after Tesla’s stock plummeted 11.4% in response to reports that the company reduced its manufacturing output in China. Between the first week of January 2020, and November 2021, Tesla’s stock price had increased by more than 13 times. Since then, the stock has dropped 73%, reducing the market valuation of the electric car firm from almost $1.2 trillion to less than $350 billion as of Tuesday’s close.
Paul Krugman is a highly-esteemed author and educator who specializes in International Economics and Macroeconomics. He is a Yale University and Massachusetts Institute of Technology graduate and a recipient of the Nobel Memorial Prize in Economic Sciences. His opinion on the matter of cryptocurrency is one that deserves serious consideration from the world’s leading experts and decision makers.