(TipRanks) - Nouriel Roubini took a stance on cryptocurrency recently, and crypto stocks, from Coinbase (NASDAQ:COIN) to Riot Blockchain (NASDAQ:RIOT) to Microstrategy (NASDAQ:MSTR) took a pounding as a result.
There’s a reason they call him “Dr. Doom,” and the crypto market just found out why. So how did Roubini trigger a massive slide in crypto stocks? The most immediate cause was Roubini’s remarks at the World Economic Forum in Davos, Switzerland, earlier today.
During those remarks, Roubini declared that “literally 90% of crypto is a scam.” He amplified this position by noting that most of the crypto market was also “a criminal activity” and “a total real-bubble Ponzi scheme that is going bust.” Further news supplemented Roubini’s disastrous stance, which included crypto lender Genesis preparing to file for bankruptcy. Additionally, the Justice Department in the United States is looking to launch a “…major, international cryptocurrency enforcement action.”
It managed to get worse from there. Roubini also noted that there was a “massive disconnect” between markets and the Federal Reserve and that a market crash would either occur fairly soon or about six months out or so. Roubini connected the massive inflationary spikes we’ve seen in recent months to a potential crash, noting that the Fed would either “…do much more, causing economic and financial crash” or “…wimp out”. “Wimp(ing) out” here would feature a market rally but a crash down the line.
All three stocks declined in Wednesday afternoon trading. Analyst consensus declares Riot Blockchain a Strong Buy, Microstrategy a Moderate Buy, and Coinbase a Hold. Coinbase offers a paltry 8.1% upside potential thanks to its average price target of $56.19. Microstrategy, meanwhile, offers a 115.21% upside potential on an average price target of $477.33.
By Steve Anderson
January 18, 2023
