The internet bubble-like “Washout” crypto

The contagion of FTX, the collapse of crypto prices, the failure of connected companies, is not yet over according to Scott Minerd, CIO of Guggenheim Partners: we are going close to another financial bubble, just like the Internet bubble. 

Despite Scott Minerd‘s confidence in the cryptocurrency sector, the CIO believes that this is a time of dramatic decline that is not yet over. But all this should not break down the system, which, as always, will go on even after this crisis is over. 

The crypto world and the financial bubble through the eyes of Scott Minerd

Scott Minerd is the Global Chief Investment Officer (CIO) of Guggenheim Partners, a global financial services investment and advisory firm that focuses on investment banking, asset management, capital markets services, and insurance services.

In a recent interview granted to Bloomberg last week, the CIO had the opportunity to share his thoughts on the future of cryptocurrencies after the FTX crisis and collapse. 

As we know, many companies have been under great economic pressure following the implosion of FTX, the domino effect triggered liquidity problems and financial crises for many companies, with some companies even going bankrupt as a result of FTX.

The phenomenon also triggered a series of audits by financial agencies in various nations, creating a rush for transparency and security in the industry. 

Although the FTX situation seems much clearer to everyone, a number of issues have come to light that were previously unknown, and it is clear which companies are most involved and more importantly how. According to Scott Minerd, this is just the beginning of a major overall industry washout. 

The comparison Guggenheim’s CIO makes is very similar to that of the Internet bubble: there will be losers but survivors will triumph. The industry, according to Minerd, is still in its infancy and needs more robust regulation. The evolution of the sector into something even bigger will depend a lot on the regulatory framework to legitimize the evolution itself, thus eventually becoming a general economy. 

“I think there is still a lot to be done…. And the reason is that this is just like any number of periods when we had easy money and a lot of speculation-the weaker players fall first. Crypto was obviously something crazy.”

Scott Minerd and the contrast with Bitcoin

“There is another shoe to drop – I can’t tell you where it is. The reason is that this is just like any number of periods when we had easy money and a lot of speculation; The weaker players fall first. Crypto was obviously something crazy.”

We do not know who Scott Minerd was referring to here, but over time we know that his thinking on Bitcoin has always been full of ups and downs. Over the years, Guggenheim’s CIO has switched sides several times, going from being a fan of Bitcoin, and predicting the moon for it, to calling it a questionable craze. 

In 2020, Scott Minerd predicted that Bitcoin could rise to $400,000; a few months later he extended his prediction to $600,000. 

Then in May 2021, CIO Scott Minerd’s idea changed dramatically, going so far as to compare Bitcoin to the famous “tulip bubble” that occurred in the 17th century. 

All his predictions also went down, and in July of this year, he spoke out again stating that Bitcoin could collapse as low as $15,000 and that he would never invest in it during these uncertain times. His prediction was precise and accurate.

Scott Minerd’s conclusion

“Although a bullish cycle may not be imminent, Bitcoin (Bitcoin) and other major cryptocurrencies maintain points of resistance despite continued turbulence due to the FTX contagion. We could be looking at a positive 2023 for the sector as we gain more clarity on regulation.”

Although Guggenheim’s CIO is very cynical in his predictions, he has confidence that the industry will remain resilient. New regulations and an industry-friendly regulatory framework will be the solid foundation for the bullish market. For the crypto universe, it will be a real revolution that will result in major milestones for the investors and companies involved.