Is $10,000 Low for Bitcoin?

Legendary investor Mark Mobius, now head of Mobius Capital Partners, just announced a $10,000 price target. Bitcoin (BTC -0.04%). He is now confident that bitcoin will trade around the current level of $17,000 in the near term before falling as much as 40% in 2023. Bitcoin at $10,000 will bring the cryptocurrency down to October 2020 levels and wipe out all Bitcoin wealth. in a past bull market.

Mobius, of course, is known as the “godfather of emerging markets” and is no stranger to taking risks. During his 30-year career at Franklin Templeton Investments, he helped transform emerging markets into an asset class, and he certainly knows what can happen in volatile, unproven and unregulated markets. If Mobius is calling for a $10,000 price target for Bitcoin, is it time to get out before it bottoms out?

There are two reasons why Bitcoin reached $10,000

As Mobius sees it, there are several key reasons why Bitcoin could fall 40% to $10,000 next year. Mobius says the first and most important reason is inflation and the Federal Reserve’s “printing press.” During the cryptocurrency boom, there was easy money and people had a lot of money to speculate in crypto. But now, with the FED tightening its monetary policy and raising interest rates, this situation will disappear.

Image source: Getty Images.

Second, Mobius notes that Bitcoin continues to break technical support levels, showing potential weakness. Every time Bitcoin breaks through one of these levels, it makes it much easier to fall to the next support level. Back in May, for example, when Bitcoin was trading at $28,000, Mobius suggested it would fall to $20,000. Bitcoin has now crossed the $20,000 support level and is testing the $16,000 support level. From there it’s anyone’s guess, but $10,000 seems most likely because that’s the price Bitcoin fell to before its record bull market rally.

Emerging markets vs. crypto markets

Mark Mobius certainly makes good points. But he also looks at cryptocurrency markets from the perspective of emerging markets. Back in the mid-1980s, Mobius literally controlled the launch of the emerging market asset class and has been active in emerging markets ever since. From his vantage point, what’s happening with cryptocurrency now should remind him a lot of what’s happened in emerging markets over the past 40 years.

Mobius described how unlikely it is to get people to initially invest in non-Western markets because of their perception of risk. This was the pre-internet era, and getting capital in and out of emerging markets was hard work. Companies in these countries lacked a corporate governance concept and undeveloped risk management controls. Executives focused primarily on enriching the elite without disturbing the shareholders. Add massive political risk, and it meant financial contagion could spread overnight.

Sound familiar? This is almost like the situation in the cryptocurrency market right now. We see that the lack of regulation in the market has led to some shady activity — some might say criminal activity. We see how quickly contagion can spread when key pillars of risk management and corporate governance are not in place. And we see how the get-rich-quick mentality of many cryptocurrency developers creates negative incentives for long-term growth.

But guess what? The emerging markets asset class ultimately became one of the biggest innovations on Wall Street. Over the past 40 years, we have seen how globalization has become one of the strongest investment theses ever. We have seen nations that used to be scorned as “third world” eventually become huge economic monsters. And we’ve seen rising living standards in nations from Asia to Latin America.

Is Bitcoin a bargain?

All of this makes me hopeful that cryptocurrency will eventually become the same asset class. This is what Bitcoin visionaries have always predicted and what nations like El Salvador – the first country to make Bitcoin legal tender – are now trying to realize. Yes, cryptocurrency needs more regulatory oversight. Yes, places like crypto need someone to check the books FTX. But it’s hard not to see the same promise for cryptocurrencies that Mobius once saw in emerging markets. For this reason, I believe that $10,000 will be the bottom for Bitcoin.

As even Mobius admits, it’s a bit amazing how well Bitcoin has held up after the FTX contagion. It is surprising that it is still holding firm to the $17,000 level. Call me a naive optimist, but there’s no way I’m selling Bitcoin right now. I’m buying the downside even if Bitcoin starts to fall to the $10,000 level. If there’s one cryptocurrency to buy and hold forever, it’s Bitcoin.

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