Mark Mobius, Founding Partner of Mobius Capital Partners.
Paul Morris | Bloomberg | Getty Images
Bitcoin could crash to $10,000, a more than 40% drop from current prices, veteran investor Mark Mobius told CNBC on Thursday.
The Mobius Capital Partners co-founder, who correctly called the drop to $20,000 this year, said bitcoin is “not far” from $10,000 now that it has broken through technical support levels of $18,000 and $17,000.
Although Mobius expects bitcoin to hover around its current level of $17,000, a move to $10,000 could happen in 2023, he said.
The investor, who made his name at Franklin Templeton Investments, told CNBC that his bearishness on bitcoin stems from rising interest rates and overall tighter monetary policy from the US Federal Reserve.
“With higher interest rates, the attractiveness of holding or buying bitcoin or other cryptocurrencies becomes less attractive, as holding the coin itself does not earn interest,” Mobius said via email.
“Of course, there have been a number of offers of 5% or higher interest rates on crypto deposits, but many of these companies offering such interest rates have gone bankrupt in part as a result of FTX. So as these losses mount, people start to fear holding a crypto coin to earn interest.”
There are many companies offering investors extremely high interest rates to park their cryptocurrencies with them. Often these companies rely on lending consumer crypto to others at really high interest rates, then splitting the production with consumers. 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 had a large exposure to the fallen FTX exchange.
Mobius also said that the cryptocurrency boom is directly related to “the Fed’s printing press running over time, so the US dollar money supply has grown 40% more in the last few years.”
“So there was an abundance of money for crypto coin speculation,” Mobius added.
Over the past few years, the Fed has kept interest rates extremely low and engaged in quantitative easing, which is believed to be helping the boom in areas of the market such as tech stocks and crypto. But the central bank has tightened monetary policy this year, raising interest rates sharply.
“Now that the Fed is pulling that money, people’s ability to play the market becomes much more difficult,” Mobius said.
Mobius has been relatively successful with his Bitcoin talks this year. In May, when the price of Bitcoin was above $28,000, he told Financial News that Bitcoin would probably fall to $20,000, then bounce back, but eventually fall to $10,000.
Although the $10,000 mark has not been reached, Bitcoin has fallen to $15,480 this year.
If the $10,000 Mobius call materializes, it will add to a miserable few months for the cryptocurrency market, which has seen more than $1.3 trillion wiped off its value this year.