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 coin is one of the biggest bubbles in history, Payne, president of Payne Capital Management, told Yahoo Finance on Friday.
I think that bubble is going to burst. He added that it's going to be ugly.
The global market for cryptocurrencies is around $2 trillion. The dot-com stocks were worth half a billion dollars when the dot-com bubble burst. Inflation adjusted that's like $1 trillion in today's dollars. Payne said that most of the stocks became worthless.
Payne has a bold prediction, even if the price of cryptocurrencies has recently been volatile. Over the weekend, Bitcoin plunged to under $50,000, a sluggish hope of $100,000 by the end of the year. The coin is up 70% year-to-date.
It's been 2021 that many would agree that it's the year that cryptocurrencies went mainstream. Big banks are looking for talent backed byBitcoin, and Goldman Sachs GS is exploring the possibility of loans backed byBitcoin. There are growing numbers of companies that are exposed to at least Bitcoins, including Meta's Facebook, Square SQ Tesla TSLA and MicroStrategy MSTR, among others.
Payne believes thatBitcoin can still go higher because of excess liquidity looking for a home.
There is too much money out there that can be poured into the market. The adviser said it's just getting bigger and bigger, because it's just going to become a bigger and bigger casino.
We're not using it for commercial use at the end of the day. It's just more people who are speculating and I think it's very analogous to when the tech bubble bursts, or when you go back to the housing bubble where everyone is involved, said Payne.
Even though the recent Omicron variant threat, the strategist is a proponent of putting money into cyclical stocks.
He added that the cyclical trade is the long game because things are going to get better.