Crypto bubble in trouble

Nobel Prize-winning economist Paul Krugman said the cryptocurrency bubble will burst but not the US property market, as a Fed official warned a more aggressive interest rate hike.

The Nobel laureate told the New York Times he found that crypto investors do not fully understand the risks of the speculative financial products involved, similar to the US subprime crash which cracked the American housing market and caused the 2008 global financial crises.

Though cryptocurrency prices had slumped in fear of tapering, the Federal Reserve could opt to raise its benchmark rate by 50 basis points if a more aggressive approach to taming inflation is needed, Raphael Bostic, president of the Fed's Atlanta branch, told the Financial Times in an interview.

Bostic stuck to his prediction that three quarter-point increases starting in March would be the most likely scenario, though stubbornly high consumer prices could justify a more robust rate rise. The Fed typically increases rates in quarter-point increments.

Bloomberg and staff Reporter