Payne Capital Management’s president has warned that crypto is “one the biggest bubbles in history.” He said that the bubble would eventually burst, and that it “would be ugly.”
According to Financial Adviser, Crypto is a big bubble that’s about to burst.
Ryan Payne, Payne Capital Management’s financial adviser, spoke on Yahoo Finance Monday about the future outlook of bitcoin and the cryptocurrency markets.
Payne is responsible for the design and supervision of all financial advisors within his firm. Before establishing Payne Capital Management he was a Merrill Lynch financial advisor for almost eight years.
After agreeing with Charlie Munger (Vice Chairman Berkshire Hathaway), the executive started by saying that Charlie Munger recently said that current markets are more wild than the dotcom bubble. The financial advisor stressed that there are “pockets of bubbles being created”.
The whole Bitcoin thing, the whole cryptocurrency is one of most significant bubbles.
Munger, often called Warren Buffett’s right-hand man and often referred to as Munger’s right-hand person, also spoke out on cryptocurrency, especially bitcoin. He expressed gratitude to China for banning crypto, and stated that he wished crypto hadn’t been invented.
Payne said that bitcoin could still rise, adding:
This market is flooded with money. It is only getting bigger.
“At the end of the day, we’re not using it for that much more commercial use. It’s just more people speculating,” he continued, adding that “it’s very analogous to when the tech bubble burst.”
The president of Payne Capital Management further opined: “The reasons for owning it don’t make a lot of sense because really it’s not a great store of value as we know. It’s extremely volatile. It’s fake scarcity. It’s not like gold that has real scarcity.” He emphasized:
I do think eventually that bubble is going to burst. It’s going to be ugly.
Noting that the global crypto market cap “is somewhere over $2 trillion,” Payne detailed: “When the dot-com bubble burst, those dot-com stocks were worth like half a billion dollars — inflation-adjusted that’s like $1 trillion in today’s dollars. Most of those stocks became worthless. Even Amazon went down 80% to 90% when the tech bubble burst. It took you like 14 years to get back on your money.”
He concluded: “So I do think that bubbles are there. They are pervasive right now. The smart money here is you can get out early. It’s better to be early than late and get into some of those cyclical names which are selling off right now. Diversify your portfolio. Protect yourself because eventually the music’s going to stop and when it does, no one‘s going to tell you ahead of time.”