Roubini Warns of Crypto Apocalypse Amid Bitcoin’s Decline

Nouriel Roubini’s central argument dismantles the popular notion that Bitcoin serves as a hedge against macroeconomic and geopolitical instability. He points to 2025 as a definitive case study: while gold surged over 60% amid rising public debt, trade wars, and escalating tensions involving the US, Iran, and China, Bitcoin fell 6%. This divergence, Roubini asserts, is not an anomaly but a pattern. “Bitcoin repeatedly declined during periods when gold rallied,” he noted, concluding that the cryptocurrency behaves not as a safe haven but as a “leveraged risk asset” correlated with speculative stocks.

This performance directly contradicts predictions made following Donald Trump’s return to the presidency, which was bolstered by significant backing from crypto industry figures. Evangelists had forecast Bitcoin reaching at least $200,000 by the end of 2025, framing it as “digital gold.” Instead, as of Roubini’s writing, Bitcoin was down 42% from its October peak and trading below its level at Trump’s election. The collapse was even more severe for politically-themed meme coins, with the TRUMP and MELANIA tokens plummeting 95%, underscoring the extreme volatility Roubini attributes to this “pseudo-asset class.”

Roubini places significant blame for the current instability on the regulatory rollback enacted under President Trump. He details a series of actions, including the signing of the Guiding and Establishing National Innovation for US Stable Coins (GENIUS) Act and the push for the Digital Asset Market Clarity (CLARITY) Act, which dismantled most crypto regulations. The administration further engaged directly with the industry, profiting from crypto deals, promoting a namesake meme coin, pardoning convicted crypto criminals, and hosting private White House dinners for crypto insiders.

It is the GENIUS Act, however, that Roubini singles out for its potential to cause widespread damage. He warns the legislation risks “recreating the instability of 19th-century free banking.” The critical flaw, he argues, is that stablecoins—digital tokens pegged to fiat currencies like the dollar—operate without the safeguards of traditional finance. They lack narrow bank regulation, access to a lender-of-last-resort (like the Federal Reserve), and federal deposit insurance. This makes them profoundly vulnerable to bank-like runs. Roubini also criticizes proposals to allow stablecoins to pay interest, warning this could destabilize the broader fractional reserve banking system unless payments and credit creation are strictly separated.

Beyond market performance and policy, Roubini attacks the foundational premises of cryptocurrency. He reiterates his long-standing view that crypto fails as a currency because it is neither a practical unit of account, a scalable payment system, nor a stable store of value. As evidence, he cites the experience of El Salvador, the first country to adopt Bitcoin as legal tender, where it still accounts for less than 5% of transactions years later.

Furthermore, Roubini argues crypto is not a true asset because it generates no income streams and lacks intrinsic, real-world utility. The only widely adopted application after 17 years, he concedes, is the stablecoin—which he describes merely as a digital replica of existing fiat money. He also contends that truly decentralized finance (DeFi) will never achieve scale because governments will not permit large-scale anonymous transactions. Anti-money laundering (AML) and know-your-customer (KYC) requirements, he states, inevitably reintroduce centralization and undermine claims of lower costs, rendering most blockchain systems “centralized, permissioned, and privately controlled.”

Roubini’s stark assessment coincides with renewed market stress. Bitcoin fell another 6% in a single day, trading below $71,600 and adding to broader unease. Analysts are now warning that continued weakness could have severe implications beyond crypto-specific funds. There is growing concern that corporations and financial firms holding large Bitcoin reserves on their balance sheets may face significant write-downs and systemic risk if the price decline persists, creating potential contagion.

The economist’s overarching message is a call for policymakers to recognize these compounded risks—of a volatile speculative asset, an unstable payments experiment, and a deregulated shadow banking system—before what he terms a “crypto apocalypse” inflicts further damage. He frames the current downturn not as a typical cycle but as a validation of his critiques on functionality, correlation, and financial stability, hoping it prompts a fundamental reevaluation of crypto’s role in the global financial system.