New moves by the Federal Reserve will hit the crypto markets hard, says veteran investor Mark Mobius
Mark Mobius, renowned emerging market investor and co-founder of Mobius Capital Partners, believes that upcoming Federal Reserve measures could drag the cryptocurrency market down.
In one (n interview With Kitco News, Mobius says he expects financial markets, especially cryptocurrencies like Bitcoin and Ethereum, to fall if the Federal Reserve decides to quickly cut asset purchases.
“In fact, they definitely do a bit of tapering, but if it happens quickly and suddenly, you could get into a real tantrum. It could affect the markets dramatically because people then look for the funding, but it’s not there. The money will not be available.
I think you will see when that happens the cryptocurrencies will be hit hard and that will affect the psychology of many, many people, especially young people who have invested a lot of money in cryptocurrencies. And then of course you will see a decline in the stock market. ”
The investor adds that the crypto asset class will most likely be the first domino to fall once the Federal Reserve begins tightening and fiscal incentives dry up.
“In order for these cryptocurrencies to retain their value, they need more money. In other words, [you’ve got to] more people come and believe that these cryptocurrencies will increase in value. Of course, you have the same thing with the exchange, but cryptocurrencies [are] particularly susceptible to a lack of … additional cash. “
Mobius says the tech industry is also vulnerable to an asset bubble bursting.
“I’m talking about tech companies that don’t make money … but that are driven by hope, by people who hope there’s another Amazon or another Apple or whatever … those are likely to be hit first.” ”
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