Brett Heath Questioned the Value of Bitcoin
Metalla Royalty & Streaming is a company from Canada, which offers exposure to precious metals through gold and silver royalties and streams. The company’s CEO Brett Heath made quite interesting comments about bitcoin and cryptocurrencies in general. Heath stated that crypto will lead the charge into the next financial crisis. He compared crypto to the tech-induced crash of the early 2000s as well as the 2008 mortgage crisis.
Brett Heath mentioned one interesting detail about all financial crises that happened in the past. They all have several things in common and one of them is the mass adoption of a new financial product or a new technology, that’s not very well understood. In that context, he mentioned the 2008 mortgage crisis. At that time, the public adopted mortgage-backed securities collateralized debt obligations. And once society embraced the new financial product, it crashed and created huge problems.
The company’s CEO described cryptocurrencies as a license for the private sector to print money. Heath questioned the amount of liquidity that has been pumped into the cryptocurrency market since the beginning of 2020. Interestingly, he drew a comparison with the United States’ M1- total liquid money in circulation. It increased by four and a half times according to Brett Heath. The M1 increased from $4,018 billion in January 2020 to around $18,935 billion as of April 2021.
Bitcoin and Brett Heath’s position
Brett Heath also appears to hold concerns regarding the systematic risk from mass investment into an asset class that Heath feels holds no intrinsic value. Heath and the precious metals proponents, in general, appear unfazed by predictions of bitcoin surpassing gold as a store of value. He also questioned the notion that bitcoin’s max supply of 21 million gives bitcoin scarcity or value.
He also stated that bitcoin has a significant market capitalization with massive adoption. Nonetheless, a better asset might emerge in the future. Heath did not forget to mention bitcoin’s shortcomings such as the carbon footprint.
The company’s CEO projects further complications ahead-considering there are thousands of cryptocurrencies, with a majority lacking utility.
However, he acknowledged that blockchain technology is beneficial. But new cryptocurrencies are emerging with similar attributes without any uniqueness. Such cryptocurrencies will be the main casualty in case of the sector’s meltdown. Brett Heath stated that some cryptocurrencies would sustain the collapse and dominate similar to Google during the tech boom wipeout.
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