Billionaire Investor Warns of an Inevitable Crypto Crash

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Are cryptocurrency investors irrational? This billionaire and veteran investor thinks so.

Magellan Financial Group manages more than A$113 billion in global listed equities and global infrastructure. So its chief investment officer, Hamish Douglas, knows a little bit about what makes a good investment — and what makes it risky.

That’s why it pays to listen to his warning about the cryptocurrency market.

Douglas, who is widely believed to be one of the most successful fund managers in Australia, recently warned that there is no escape from the cryptocurrency market. will Crash and even bitcoin, the most stable virtual currency, is likely to see its value drop to zero.

Here’s what Douglas had to say about why he thinks the cryptocurrency market is doomed to explode.

Unreasonable behavior fuels crypto frenzy

Douglas believes that the cryptocurrency markets are likely to crash hard. He told Tis australian financial review.

Not only did Douglas issue his stern warning – he also offered some insight into why he thought cryptocurrency prices would crash. Specifically, he believes that the cryptocurrency market is currently going through a speculative bubble with rising prices due to irrational behavior on the part of investors who are paying high prices for virtual currencies despite the fact that many of them have little intrinsic value.

Douglas warned that “cryptocurrency, is one of the greatest irrationals I have seen in a very, very, very long period of time due to its cult-like following behind it and the scope behind it” when speaking to Australian Financial Audit.

Noting that he knew his position would be unpopular, Douglas said he knew he was opening himself up to potential attacks by issuing his warning about an upcoming crypto crash. However, he also indicated that he is confident that the prices of these investments will be inflated by people who have been caught up in the hype surrounding Bitcoin and its competitors instead of making rational investment decisions based on a sound analysis of crypto prospects.

“There are millions and millions of people taking part,” he said, referring to the crypto craze that has driven prices up in recent years. “Some people, they’ve never invested before, and the only bandwagon they’ve joined is the cryptocurrency bandwagon and it’s almost like debt.”

Given his stance on cryptocurrencies, it is not surprising that none of the Magellan funds own any Bitcoin or other virtual currencies. However, he also expressed concern that the crypto market crash could affect the broader markets if it affects investor confidence.

Despite his pessimistic outlook, Douglas did not offer a prediction of when he thinks the crypto bubble will burst. Instead, he told financial review, “I can’t tell you when that will happen by the way. It could happen soon, it could happen some time in the future… I think when we look back 20 years later, it will be a case study of the irrational.”

Of course, Douglas’s opinion is one of many, and others are more optimistic about Bitcoin. But before you buy investments in cryptocurrency, it is worth considering whether the billionaire is right about the risks – and the reason why cryptocurrency prices are rising so quickly even with little benefit to most real-world currencies.

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