Bitcoin is in a 'massive bubble' and investors don't understand how its supply works, says economist David Rosenberg (BTC)

<p><img src="https://static3.businessinsider.com/image/5f3fb48e42f43f001ddfe3c7-2400/dl_roundtable_prime_00059.jpg" border="0" alt="David Rosenberg" data-mce-source="Rosenberg Research &amp; Associates" data-mce-caption="Known for identifying the housing market bubble in 2005, David Rosenberg is the chief economist and strategist at Rosenberg Research &amp; Associates"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><ul><li aria-level="1"><strong>Economist David Rosenberg </strong><a href="https://www.bloomberg.com/news/videos/2020-12-17/bitcoin-is-in-a-massive-bubble-economist-rosenberg-says-video"><strong>told Bloomberg</strong></a><strong> he believes bitcoin is in a bubble and investors don't understand how its supply works.&nbsp;</strong></li><li aria-level="1"><strong>"Everybody seems to believe that we're going to get to that 21 million cap on the supply constraint, but there's really nothing in the protocol to suggest that the supply of bitcoin can't go up once we hit that limit," the economist said.</strong></li><li aria-level="1"><a href="https://markets.businessinsider.com/currencies/news/bitcoin-btc-price-23000-massive-rally-record-highs-cryptocurrency-market-2020-12-1029902545"><strong>Bitcoin reached a record high</strong></a><strong> of $23,777 on Thursday shortly after topping $20,000 for the first time on Wednesday, notching a 20% gain. Rosenberg said the chart looks "absolutely crazy right now."</strong></li><li aria-level="1"><a href="https://markets.businessinsider.com/currencies/btc-usd"><strong>Watch bitcoin trade live here</strong></a><strong style="color: #222222;">.</strong></li></ul><hr><p>Economist David Rosenberg <a href="https://www.bloomberg.com/news/videos/2020-12-17/bitcoin-is-in-a-massive-bubble-economist-rosenberg-says-video">told Bloomberg</a> he believes <a href="https://markets.businessinsider.com/currencies/btc-usd">bitcoin</a> is in a bubble and investors don't understand supply dynamics of the cryptocurrency.&nbsp;</p><p>"You speak to most people that are asking me to put money in bitcoin, they can't even tell you who the person was that developed it or even how it's actually mined," the Rosenberg Research chief economist said. "It's just a classic, follow-the-herd, extremely crowded trade. It's in a massive bubble." <br><br><a href="https://markets.businessinsider.com/currencies/news/bitcoin-btc-price-23000-massive-rally-record-highs-cryptocurrency-market-2020-12-1029902545">Bitcoin reached a record high</a> of $23,777 on Thursday shortly after topping $20,000 for the first time ever on Wednesday, marking a 20% gain over the past day. The cryptocurrency is now up over 200% year-to-date, but Rosenberg said the chart looks "absolutely crazy right now."</p><p>Bitcoin's rally comes as several institutional investors and fund managers place sky-high predictions for the coin. On Wednesday, <a href="https://markets.businessinsider.com/currencies/news/bitcoin-should-be-worth-400000-guggenheim-scott-minerd-says-2020-12-1029901347'utm_source=markets&amp;utm_medium=ingest">Guggenheim's global chief investment officer, Scott Minerd, said bitcoin will surge to $400,000</a> based on its scarcity and value relative to gold.</p><p><em><strong>Read more:</strong><a href="https://www.businessinsider.com/lawyer-first-psychedelics-venture-fund-neo-kuma-2020-12" data-analytics-position="1" data-analytics-module="">The lawyer who started the UK's first dedicated psychedelics venture fund lays out how she placed her initial bets</a></em></p><p>Though Rosenberg raised his doubts about the scarcity of bitcoin and the thesis that only 21 million bitcoin are able to be mined.&nbsp;&nbsp;</p><p>"Everybody seems to believe that we're going to get to that 21 million cap on the supply constraint, but there's really nothing in the protocol to suggest that the supply of bitcoin can't go up once we hit that limit," the economist said.</p><p>While investors do know about the supply curve of gold with certainty, Rosenberg said that investors just "think they know" but don't really know about bitcoin's supply curve.<br><br>He added that the last time bitcoin behaved with such a "speculative fervor," it suffered massive disappointments in the months to follow. Bitcoin bulls say that <a href="https://www.businessinsider.in/stock-market/news/bitcoins-massive-rally-is-different-from-the-speculative-frenzy-of-2017-as-more-institutional-investors-buy-in-says-mike-novogratz/articleshow/79291143.cms">2020's rally is different because of the institutional inflows</a>. <br><br></p><p>&nbsp;</p><p>&nbsp;</p><p>&nbsp;</p><p><a href="https://markets.businessinsider.com/currencies/news/bitcoin-price-bubble-david-rosenberg-supply-mining-cryptocurrency-outlook-record-high-2020-12-1029903485#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/racist-origins-marijuana-prohibition-legalization-2018-2">The racist origins of marijuana prohibition</a></p>
Click here to read full news..