Finance

Mobius warns ‘crypto could really blow up’: central banks should pay attention

Mark Mobius, the veteran emerging markets investor, warned of a potential cryptocurrency collapse that would be felt across global stock markets.

“Cryptocurrency is something that could really blow up. If bitcoin crashes, it will probably affect stock markets across the world, although temporarily,” Mobius, one of the world’s most renowned investors, told Financial News.

The price of bitcoin surged to a record high of more than $66,000 after the debut of the world’s first bitcoin futures-based exchange traded fund by ProShares on 19 October.

The digital currency has risen by almost 50% since the start of October and was trading around $65,000 at the time of writing.

However, the 85-year-old investor said he was particularly concerned about the interest rates being offered to investors by some crypto exchanges and platforms.

READ Three charts to show how bitcoin’s record high took the crypto market by storm

Coinbase offers annual interest of up to 5% on certain cryptocurrencies. Meanwhile, Gemini touts a 8.05% yield, and Hodlnaut users can earn up to 12.73% on their crypto holdings, according to their respective websites.

Mobius said some investors were piling into cryptocurrencies because the interest rates being offered were far better than bank deposits.

“This is the kind of thing central banks should be paying attention to,” he said.

“If interest rates are so low, it hurts the guy on the street. They are forcing people to gamble. I don’t know what central banks are thinking. It’s a big, big danger facing us.”

To contact the author of this story with feedback or news, email David Ricketts

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