Mark Mobius, founding partner of Mobius Capital Partners.
Paul Morris | Bloomberg | Getty Images
Bitcoin could crash to $10,000, a greater than 40% plunge from current prices, veteran investor Mark Mobius told CNBC on Thursday.
The co-founder of Mobius Capital Partners, who appropriately called the drop to $20,000 this yr, said that bitcoin is “not far-off” from $10,000 now that it has broken the technical support levels of $18,000 and $17,000.
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While Mobius expects bitcoin to hover around its current $17,000 level, the move to $10,000 could occur in 2023, he said.
The investor, who made his name at Franklin Templeton Investments, told CNBC that his bear case for bitcoin stemmed from rising rates of interest and general tighter monetary policy from the U.S. Federal Reserve.
“With higher rates of interest, the attraction of holding or buying Bitcoin or other cryptocurrencies becomes less attractive since just holding the coin doesn’t pay interest,” Mobius said via email.
“In fact there have been numerous offerings of 5% or higher rates of interest for crypto deposits but lots of those firms offering such rates have gone bust partly in consequence of FTX. In order those losses mount people change into terrified of holding the crypto coin with a purpose to earn interest.”
There have been quite a few firms offering investors sky-high rates of interest for parking their crypto with them. Often, these firms would depend on lending users’ crypto out to others at really high rates of interest, then splitting the proceedings with users. But as crypto prices crashed and liquidity dried up earlier this yr, lots of these firms collapsed.
One such company is Celsius which filed for bankruptcy in July. One other is BlockFi, which had large exposure to the fallen exchange FTX.
Mobius also said the boom in crypto was directly related to the Fed’s “printing machine working over time so that cash supply in USD rose by 40% plus in the previous couple of years.”
“So there was abundant money to take a position on crypto coin,” Mobius added.
The Fed has had ultra-low rates of interest and engaged in quantitative easing over the past few years which has been credited with helping the boom in areas of the market like technology stocks and crypto. However the central bank has been tightening its monetary policy this yr by raising rates of interest sharply.
“Now because the Fed is drawing back that money the power for people to play available in the market becomes far more difficult,” Mobius said.
Mobius has been relatively successful together with his bitcoin calls this yr. In May, when the worth of bitcoin was above $28,000, he told Financial News that bitcoin would likely fall to $20,000, then bounce, but ultimately move all the way down to $10,000.
While the $10,000 mark has not been reached, bitcoin has fallen as little as $15,480 this yr.
If Mobius’s $10,000 call materializes, it can add to a miserable few months for the cryptocurrency market which has seen greater than $1.3 trillion wiped off of its value this yr.
