Mark Mobius, founding partner of Mobius Capital Partners.
Paul Morris | Bloomberg | Getty Images
Bitcoin could crash to $10,000, a drop of more than 40% from current prices, veteran investor Mark Mobius told CNBC on Thursday.
The co-founder of Mobius Capital Partners, who correctly called the drop to $20,000 this year, said bitcoin is “not far” from $10,000 now that it has broken above technical support levels of $18,000 and $17,000.
While Mobius expects bitcoin to hover around its current level of $17,000, the move to $10,000 could take place in 2023, he said.
The investor, who made a name for himself at Franklin Templeton Investments, told CNBC that his bearish case for bitcoin stemmed from rising interest rates and the general tightening of monetary policy by the US Federal Reserve.
“With higher interest rates, the allure of holding or buying Bitcoin or other cryptocurrencies becomes less attractive because simply holding the coin does not earn interest,” Mobius said. by email.
“Of course, there have been a number of offers of interest rates of 5% or more for crypto deposits, but many of those companies offering such rates have gone bankrupt in part because of FTX. , as these losses increase, people are afraid to hold the crypto coin in order to earn interest.”
There have been many companies offering investors exorbitant interest rates to park their crypto with them. Often, these companies relied on users lending crypto to others at very high interest rates and then sharing the process with the users. But as crypto prices crashed and liquidity dried up earlier this year, many of these companies collapsed.
One such company is Celsius, which filed for bankruptcy in July. Another is BlockFi, which was heavily exposed to the fallen exchange FTX.
Mobius also said the crypto boom was directly tied to “the operation of the Fed’s printing machine over time, such that the USD money supply has increased by more than 40% in the past few years. “.
“So there was a lot of money to speculate on cryptocurrency,” Mobius added.
The Fed has had ultra-low interest rates and engaged in quantitative easing over the past few years, which has been credited with helping the boom in market areas like tech stocks and crypto. . But the central bank has tightened its monetary policy this year by raising interest rates sharply.
“Now that the Fed is pulling that money out, it’s getting a lot harder for people to play the market,” Mobius said.
Mobius has done relatively well with its bitcoin calls this year. In May, when the price of bitcoin was above $28,000, he told Financial News that bitcoin would likely fall to $20,000, then rebound, but eventually drop to $10,000.
While the $10,000 mark was not reached, bitcoin fell to $15,480 this year.
If Mobius’ $10,000 call does materialize, it will add to a miserable few months for the cryptocurrency market which has seen over $1.3 trillion wiped from its value this year.