Crypto: The instrument of the next financial crisis, according to Metalla CEO
May 31, 2021 9:03 AM
The CEO of Metalla Royalty & Streaming believes that the cryptocurrency market has all the ingredients to cause a future financial crisis.
Do crypto and subprime have things in common? Today, probably not. However, it could be different in the future. And what would bring them together would then likely be a financial crisis.
Brett Heath does not hide his concerns. The CEO of Metalla Royalty & Streaming, a Canadian precious metals company, sounded the alarm in an interview on Kitco News. According to him, the crypto "will lead the charge towards the next financial crisis".
Massive adoption of techno and it's the crisis
Brett Heath believes that cryptocurrency has similarities with the crash of Internet companies in the early 2000s and with the mortgage crisis of 2008. Which precisely? A new solution.
“Look at the last decades and examine all the financial crises that have occurred. You can see that they all have two things in common. And one of them is the massive adoption of a new financial product or a new poorly understood technology, ”argues the leader.
Make no mistake, Heath is no fan of cryptocurrency, which amounts to licensing the private sector to print change. However, this only increases liquidity in the market.
This liquidity is already considerable because of the crisis. The cash issued since January 2020 by the US Federal Reserve has more than quadrupled. That's a lot, but less than for crypto, which had more than tenfold capitalization over the period.
Bitcoin? "No intrinsic value"
This amount is growing, but not the intrinsic value of crypto-assets like Bitcoin, considers the boss of Metalla Royalty & Streaming. He therefore fears a massive liquidation like that of technology companies in early 2000.
“When this amount of capital disappears from digital wallets around the world, chances are there will be significant financial repercussions,” says Brett Heath.
However, crypto today does not exhibit a sufficiently high level of adoption to trigger a crisis of this magnitude. Until then, it cannot be ruled out that these assets will be better controlled by investors and more regulated to prevent such financial risks.
This is an option. But, it is not impossible that democratization will indeed lead to a new financial crisis, like that of the much-vaunted subprime loans, including by politicians.