Asset management firm Mobius Capital Partners co-founder Mark Mobius has said for cryptocurrencies to maintain their value, they need an input of more capital.
Speaking to Kitco News, Mobius indicated that the only way for cryptocurrencies to attract more money is by people believing the value will soar in the future. However, he warns that cryptocurrencies are susceptible to run out of cash.
“In order for these cryptocurrencies to maintain their value, they need more inputs of money. In other words, you have more people coming in and believing that these cryptocurrencies will go up in value because you have the same thing with a stock but cryptocurrencies are particularly vulnerable to a shortage of extra cash,” said Mobius.
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He also hinted that the sector has attracted capital thanks to government measures to mitigate the effects of the pandemic. Mobius says that most people who are no longer expecting stimulus checks put their money in cryptocurrencies.
The value of cryptocurrencies increased in the first half of 2021 after witnessing a spike in investment from institutions. At some point, the entire cryptocurrency market hit a market capitalization of over $2 trillion.
According to Mobius, the excess cash from the government into the economy has partly contributed to the rising inflation.
Cryptocurrencies to be hit with the Federal Reserve measures
Mobius added that cryptocurrencies would be the most hit once the Federal Reserve unveils monetary support for the economy to curb inflation. He also believes that it will have a significant psychological impact on investors, especially the young.
Interestingly, Mobius termed Gold as a good haven to save assets and will likely appreciate alongside inflation. His sentiments come as cryptocurrency proponents continue to back the narrative that Bitcoin is a hedge against inflation.
However, amid rising inflation, the value of Bitcoin plunged, casting doubt on the digital asset’s status.
Related video: Mark Mobius on crypto, tech stocks, and the real way to beat inflation
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