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Hedge fund manager Mohnish Pabrai expects the crypto market to slump even further this year, according to a recent interview.
Speaking to CNBC, Pabrai said he believes that the worst is yet to come, even after the crypto market capitulated sharply this year. The market has slumped over 50% from a high of nearly $3 trillion touched in November.
Prabari’s comments echo those from celebrity investor Warren Buffet, who has also derided crypto as a store of value. Buffet believes Bitcoin has no intrinsic value, and said he wouldn’t even pay $25 for the entirety of the token’s supply.
I think most cryptocurrencies and investments will eventually be a big zero.
– Pabrai told CNBC on Wednesday
Crypto similar to the Dotcom Bubble, says Pabrai
Pabrai compared the crypto market to the Dotcom bubble of the early 2000s. The bubble was marked by a large rise in technology stock prices between 1998 and 2000, before a widespread crash in valuations.
Crypto’s fall has also mirrored those in major technology stocks this year, with the Nasdaq 100 index down in a similar range.
Pabrai believes a similar capitulation as the Dotcom crash may be in store for the crypto market.
The space has already seen a major unwinding in 2022, with Bitcoin (BTC) trading down 35% for the year. A mix of concerns over rising inflation, Federal Reserve rate hikes and the Russia-Ukraine war have eroded crypto sentiment this year.
The crash of the UST stablecoin has also further rattled sentiment towards the market.
No bottom in sight
Despite Bitcoin’s sharp losses this year, analysts are warning against trying to time a bottom for the token. This sentiment has also been extended to broader crypto markets, which have traded rangebound for over a month.
Any attempts by the market to break above $1.5 trillion in value are usually followed by a capitulation, making investing the space highly risky.
Focus now turns to upcoming U.S. inflation data this week. The reading for May- which is expected to taper slightly from a 40-year high- could either make or break a crypto rally.
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