Krugman Warns of Crypto Volatility: Tesla Stock Plunges 73%

• Nobel Laureate Paul Krugman has compared the cryptocurrency craze to the real estate bubble of the mid-2000s.
• Krugman has also compared the crypto to Tesla and its stocks, inquiring “Did the Tesla story ever make sense?”
• Tesla’s stock price has dropped 73% in response to reports of the company reducing its manufacturing output in China.

Nobel Laureate Paul Krugman has been vocal in his criticism of the cryptocurrency craze. Having compared the newfound enthusiasm for crypto assets to the real estate bubble of the mid-2000s, Krugman has now drawn parallels between crypto and Tesla and its stocks.

On Tuesday, he wrote an opinion piece in the New York Times regarding Tesla, bitcoin, and their massive market prices, inquiring: “Did the Tesla story ever make sense?” He added: “Tesla and bitcoin may have more in common than you think.”

Krugman’s remarks came after Tesla’s stock fell 11.4% in response to reports that the company reduced its manufacturing output in China. This sudden dip in stocks is indicative of the volatility of the market, as Tesla has had a period of exceptional growth in the past year.

Between the first week of January 2020, and November 2021, Tesla’s stock price increased by more than 13 times. This increase in market valuation saw Tesla become the world’s most valuable carmaker, as its market capitalization surged to almost $1.2 trillion. However, 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 notable author and educator who specializes in International Economics and Macroeconomics. He is a Yale University and Massachusetts Institute of Technology graduate and was awarded the Nobel Memorial Prize in Economic Sciences in 2008. His opinion is highly respected among the intellectual and business community, and his skepticism towards cryptocurrency has been shared by many.

Krugman’s warnings about the cryptocurrency market may prove to be prescient, as Tesla’s stock decline is a stark reminder of the volatility of the market. While it is impossible to predict the future of crypto assets, Krugman’s cautionary advice should not be taken lightly.

Bitcoin Supply in Loss Reaches 55% at Year-End: 2021 Was a Roller-Coaster Ride!

• Bitcoin has reached a peak supply in loss of 55% at the end of 2021, according to CryptoQuant’s year-end dashboard release.
• This metric measures the percentage of the total circulating Bitcoin supply that’s currently carrying some loss.
• The Bitcoin supply in loss has increased in value as the bear market has become longer.

Bitcoin has been through a roller-coaster of price movements in 2021. After a strong start to the year, the cryptocurrency market took a nosedive in the spring and has remained in a bear market ever since. Despite this, Bitcoin (BTC) has been able to hold on to its gains from the start of 2021, and it looks set to end the year in a strong position.

On-chain data shows that Bitcoin is about to end 2022 with a peak supply in loss of 55%. This metric is an indicator that measures the percentage of the total circulating Bitcoin supply that’s currently carrying some loss. It works by looking at the on-chain history of each coin in circulation to see what price it was last moved at. If this previous value for any coin was greater than the current BTC price, then that particular coin is carrying some loss at the moment, and the indicator accounts for it.

As per CryptoQuant’s year-end dashboard release, this metric reached a value of 60% during previous bottoms. The counterpart indicator is the “supply in profit,” and its value can simply be derived from the supply in loss by subtracting it from 100.

Now, here is a chart that shows the trend in the Bitcoin supply in loss during the last five years:

The value of the metric seems to have been going up in recent months | Source: CryptoQuant

As the above graph displays, the Bitcoin supply in loss has increased in value as the bear market has become longer. This trend makes sense as with each drawdown during a bear, more investors enter into the loss territory as a large amount of them would have acquired their coins during the higher, bull market prices.

In the current BTC cycle so far, the market has seen a significant influx of fresh money and the supply in loss is steadily increasing. This is an indication that more and more investors are betting on the cryptocurrency’s long-term prospects.

It remains to be seen how the Bitcoin supply in loss will evolve in the coming months, but the current trend suggests that the cryptocurrency could be in for a strong end to the year. With the new influx of capital, the demand for Bitcoin should remain strong and the losses should continue to diminish as the market recovers.

Fiji Elects Pro-Bitcoin Prime Minister: Crypto Adoption in the Pacific Heats Up

• Lord Fusitu’a, a Tongan noble and former member of the Tongan parliament, announced that Fiji has elected a new pro-Bitcoin prime minister.
• Sitiveni Rabuka was elected as the new prime minister at the head of a three-party coalition government on December 24.
• Lord Fusitu’a previously held a half-hour phone call with Sitiveni Rabuka to give him advice on how to begin BTC mining based on renewable energy and the best path for adoption for Fiji.

The Pacific Islands are set to create a buzz in the Bitcoin community in the coming year with news that Fiji has elected a new pro-Bitcoin prime minister. Lord Fusitu’a, a Tongan noble and former member of the Tongan parliament, made the announcement on Twitter. In his post, he congratulated Sitiveni Rabuka and his GOPAC Fiji’s Biman Prasad on their election as Prime Minister and Deputy Prime Minister of Fiji respectively.

On December 24, Prime Minister Rabuka was elected at the head of a three-party coalition government. Fijian voters expressed their desire for change by ousting the FijiFirst government of Frank Bainimarama after two terms in office. As prime minister, Rabuka will be responsible for foreign affairs, climate change, environment, public service, information, and public enterprises, and heads a cabinet consisting of 19 ministers and 10 deputy ministers.

Lord Fusitu’a previously held a half-hour phone call with Sitiveni Rabuka to give him advice on how to begin BTC mining based on renewable energy and the best path for adoption for Fiji. He also suggested the potential of making Bitcoin legal tender in the Pacific in 2023.

This move should be seen as a positive step towards the adoption of cryptocurrency in the Pacific Islands. It will help bring more investment and greater financial freedom to the region, while also creating more opportunities for businesses by opening up new markets.

The news of the election of a pro-Bitcoin prime minister in Fiji is likely to spur other Pacific nations to follow suit in the coming years. The Bitcoin community should watch closely to see how the situation develops, and which other Pacific nations will adopt cryptocurrency in the future.