Nobel laureate Paul Krugman says crypto has ‘disturbing’ parallels with subprime mortgage meltdown

Krugman compared thecryptocurrencies market to the mortgage crisis of the late 2000s.

In an opinion piece for The New York Times on Thursday, Krugman said he was seeing uncomfortable parallels between the U.S. subprime crash and the rise of the internet.

There are disturbing echoes of the crash 15 years ago, according to Krugman.

At a time when interest rates were low and house prices were high, banks made loans to people who were riskier. When the market became saturated, homeowners were unable to repay their loans, resulting in huge losses for the lender.

Krugman argues that speculative financial products are being sold to investors who don't understand the risks. It is worth noting that Krugman has previously likened thecryptocurrencies to a Ponzi scheme.

He said in the NYT op-ed that many borrowers didn't understand what they were getting into.

The numbers aren't big enough to prove that cryptocurrencies pose a systemic risk.

Digital currencies have fallen in recent weeks. The world's top coin is currently just over $37,000, which is almost 50% off its November record high of nearly $69,000. The market was worth $3 trillion at the peak.