'The Mother Of All Bubbles And Biggest Bubble in Human History Comes Down Crashing'

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Nouriel Roubini, economist.

• Nouriel Roubini, the economist and chairman of Roubini Macro Associates, says "the mother of all bubbles is crashing."
• He's talking about bitcoin.

The cryptocurrency markets were awash in a sea of red during early trading Friday - and one economist says we are in the middle of a major crypto-crash.

Nouriel Roubini, chairman of Roubini Macro Associates, took to Twitter Friday to call the bitcoin bubble "the mother of all bubbles." His tweet shows bitcoin's historic run compared to others such as the infamous tulip bulbs.

Twitter

"Now bitcoin crashing below 8000, headed towards 7000. Down 60% from the peak, 40% in a month and over 10% today," he said.

"The Mother of All Bubbles and Biggest Bubble in Human History Comes Down Crashing."

Crypto's terrible start to the year deepened Friday, according to Markets Insider data.

Most striking is bitcoin's fall below $8,000, marking a drop of more than $2,000 in two days. On Thursday, bitcoin dropped below $9,000 and the rupturing of this level seems to have spooked the market, with bitcoin losing 12% in Friday trade.

Roubini, a noted bitcoin critic, told Bloomberg Radio's Tom Keene that regulators have "fallen asleep at the wheel" when it comes to cryptocurrencies. Specifically, he called them out for not cracking down on initial coin offerings, a crypto-twist on the IPO process. Over $4 billion has been raised by the fundraising mechanism, which has become a darling of some criminals looking to make a quick buck off of mom-and-pop investors.

He also said they haven't done enough to address the clear fraud and manipulation in the market for digital coins.

Tether, a cryptocurrency company that has a digital coin it says is fully backed by US dollars, has printed billions of dollars "out of no where," according to Roubini.

"Tether has been used to prop up the price of bitcoin," he said. "Clear evidence of manipulation."

Concerns about the status of Tether, as noted by my colleague Oscar Williams-Grut, reached a fever pitch after Bloomberg reported this week the company was issued a subpoena by US regulators in December. The crypto plays a central role in the operation of many leading cryptocurrency exchanges, including Bitfinex, but there is speculation that the company behind it may not hold the dollar reserves it claims.

The New York Times reported in November: "One persistent online critic, going by the screen name Bitfinex'ed, has written several very detailed essays on Medium arguing that Bitfinex appears to be creating Tether coins out of thin air and then using them to buy Bitcoin and push the price up."

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