Crypto crash will wash out bad projects, predicts Guggenheim’s CIO

Scott Minerd – founder and managing partner at Guggenheim Partners – believes traders can take advantage of the significant price swings in the cryptocurrency market and generate some profits. However, investors should beware as the sector is still not done flushing itself, making it an unsuitable long-term investment option, he warned.

Crypto will imitate the Dot-Com bubble

Despite the significant increase in most digital assets following the US Federal Reserve’s decision to raise interest rates, the market is still far from its best shape. In a recent interview for Bloomberg, the global CIO of Guggenheim Partners – Scott Minerd – predicted that it will all end up like the Dot-com bubble of the late 1990s.

In his view, the industry will “flush out” more pointless projects and leave only those that present certain use cases to the financial network. However, that process means that investing in crypto in the long term can be a risky endeavor as one cannot be sure what assets will emerge after the collapse.

He argued that bitcoin and altcoins have been subject to pressure from global regulators, while reputable institutions have yet to step into the ecosystem to give investors an extra dose of courage.

“I think it needs to be deflated further and we’re going to have something similar to the collapse of the internet bubble where we have a chance to sort out who are the winners and who are the losers here. And I don’t think we’ve drained the system completely yet.”

On the other hand, traders can speculate and make significant gains in the short term, thanks to the increased volatility in the market, he added.

Earlier this month, Edward Dowd – former CEO of BlackRock – made a similar comparison between the current crypto winter and the Dot-com bubble of the last century. He believes “robust” digital assets will survive the turbulence while the worthless ones will disappear. Dowd sees bitcoin among those who will overcome the problems thanks to its underlying technology, transparency and the freedom it provides.

Minerd’s controversial stance on crypto

Over the years, the Guggenheim’s chairman has shared his opinion on the digital asset universe several times, which has been different almost every time.

In December 2020, bitcoin reached $21,000 for the first time in its history. Shortly thereafter, Minerd claimed the asset’s price to be around $400,000. He also said that his company bought BTC when it was at $10K.

Over the next few weeks, the primary cryptocurrency continued its upward trend with a new all-time high of $40,000. Nevertheless, this price increase was followed by a correction that took it to $33,000. That setback was a reason for Minerd to say that investors should take “some money off the table”.

February 2021 was another big month for bitcoin, and not surprisingly, Guggenheim’s boss returned to the bulls. He even said the asset could skyrocket to $600,000 in the future if it follows gold.

His last price analysis took place in May this year. Considering the poor performance of the crypto market, he envisioned a future BTC price tag of around $8,000.