Crypto is ‘one of the biggest bubbles ever’: Strategist

When it comes to cryptocurrency, financial adviser Ryan Payne agreed with billionaire Charlie Munger when he said, “This era is even crazier than the dot-com era.”

“This whole Bitcoin (BTC-USD) thing — this whole cryptocurrency — is one of the biggest bubbles ever,” Payne, president of Payne Capital Management, told Yahoo Finance live on Friday. 

“I do think that bubble is eventually going to burst. It’s going to be ugly,” he added. 

The global crypto market “is somewhere over $2 trillion. When the dot-com bubble burst, those dot-com stocks where worth like half a billion dollars. Inflation adjusted that’s like $1 trillion in today’s dollars. Most of those stocks became worthless,” said Payne.

Payne’s prediction is bold, even if crypto has been volatile recently. Over the weekend Bitcoin plunged to below $50,000, dashing hopes of $100,000 run by the end of the year. Still, year-to-date the cryptocurrency is up 70%. 

Many would agree 2021 has become the year crypto went mainstream. Big banks have been hiring crypto talent, and the likes of Goldman Sachs (GS) are even exploring loans backed by Bitcoin. Not to mention a growing number of companies are in some way exposed to at least Bitcoin, including Meta’s (FB) Facebook, Square (SQ), Tesla (TSLA), and MicroStrategy (MSTR), among others. 

Despite its volatile nature, Payne believes Bitcoin can still go higher because of excess liquidity looking for a home. 

“There’s too much money out there that can funnel into this market. It’s just becoming a bigger and bigger casino,” said the adviser.

“At the end of the day we’re not using it for that much more commercial use. It’s just more people speculating and I think it’s very analogous to when the tech bubble burst, or you go back to the housing bubble … where everybody’s involved,” said Payne.

The strategist is a proponent of putting money into cyclical stocks instead, even amid the recent Omicron variant threat. 

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“The cyclical trade is the long game, because things are going to continue to get better,” he added.

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