According to an interview on June 9, hedge fund manager Mohnish Pabrai believes the crypto market will continue to fall this year. Pabrai told CNBC that, despite the crypto market’s dramatic decline this year, he feels the worst is yet to come. From a high of about $3 trillion in November, the market has dropped by more than half.
Prabari’s remarks reflect those of famous investor Warren Buffet, who has criticised cryptocurrency as a store of value as well. Buffet feels Bitcoin has no fundamental value and has stated that he would not be willing to pay $25 for the total supply of the cryptocurrency.
Pabrai compared the crypto market to the early 2000s Dotcom bubble. Between 1998 and 2000, technology stock values rose dramatically, followed by a widespread drop in valuations.
Crypto’s decline this year has paralleled that of big technology firms, with the Nasdaq 100 index falling in a similar range. Pabrai believes the crypto sector will experience a similar capitulation to the Dotcom bubble.
In 2022, the space has already witnessed a significant unravelling, with Bitcoin (BTC) down 35% for the year. Concerns about growing inflation, Fed rate hikes, and the Russia-Ukraine conflict have all weighed on crypto sentiment this year. The crash of the UST stablecoin has also shattered investor confidence in the market.
Despite Bitcoin’s steep losses this year, economists warn against trying to predict when it will bottom. This pessimism has spread to the broader crypto markets, which have been stuck in a range for over a month.
The focus now shifts to this week’s inflation statistics in the United States. The May reading, which is forecast to drop slightly from a 40-year high, could make or break the cryptocurrency rise.
Read more: Two-thirds of crypto hedge funds will fail in current market crisis: Mike Novogratz
