January 21, 2022

Financial Adviser Warns that Crypto is a Bubble

Payne Capital Management’s president has warned that cryptocurrency may be one of the biggest bubbles. He stressed that the crypto market appeared to be turning into a bigger casino and said that when this bubble eventually bursts, it could get very ugly. Ryan Payne was speaking to Yahoo Finance on Monday and the financial adviser talked about the future prospect of bitcoin as well as the entire crypto market in general. Payne is responsible for co-designing the investment and financial planning strategies that his company uses and also supervises the other financial advisers they employ. Before he founded Payne Capital Management, he had worked at Merrill Lynch as a financial adviser for eight years.

The executive began by expressing his agreement with Charlie Munger, the Vice-Chairman of Berkshire Hathaway, who had recently said that the current markets were a great deal wilder as opposed to the dot-com bubble. The financial adviser said that pockets of bubbles were forming and said that bitcoin as well as the whole crypto market was one of the biggest bubbles to exist. Munger is often considered to be the right-hand man of billionaire investor Warren Buffett, had also talked about cryptocurrency, with a particular focus on Bitcoin.

He praised China for imposing a ban on cryptocurrencies and went as far as saying that he wished crypto had never been invented at all. Payne also added that there was a possibility for bitcoin to go higher because there was a lot of money out there that could flow into the crypto market, which would just make it a bigger casino. He said that they were not using crypto for commercial use at the end of the day and it was just used for speculation. He asserted that it was quite similar to when the tech bubble had burst.

According to the president of Payne Capital Management, there aren’t many sensible reasons for owning cryptocurrencies because it is not a great store of value. He opined that crypto is highly volatile because of its fake scarcity, whereas gold’s scarcity is very much real. He emphasized that the bubble would burst and things would get ugly. Payne noted that the crypto market was worth more than $2 trillion and said dot-com stocks had been worth half a billion when that bubble burst. He said that those stocks had become worthless. He pointed out that when the tech bubble burst, even Amazon had declined by 80% and it took people 14 years to get their money back.

Therefore, he said that bubbles do exist right now and are very pervasive. The executive said that the smart thing to do was get out as early as possible. He said that people need to diversify their portfolio and to protect themselves as much as possible because when the music comes to a stop, there wouldn’t be any warning. It is quite clear that Payne is not a fan of bitcoin or cryptocurrencies and is one of the many critics of the digital asset space.

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