The fund manager and founder of Mobius Capital – Mark Mobius – represented cryptocurrencies as a “measure of investor sentiment.” He classified bitcoin as a leading indicator that shows how the Dow Jones index will perform in the short term.
The American-born legacy investor Mark Mobius opined that stock traders should carefully observe what is happening in the crypto market to make the right investment choices. Specifically, he argued that bitcoin’s price is a “leading indicator” that could suggest whether the Dow Jones (a popular stock index that tracks 30 of the largest US companies) will head north or south:
“Bitcoin goes down, the next day the Dow Jones goes down. That’s the pattern you get. That shows that bitcoin is a leading indicator.”
Mobius stated that the bottom in traditional markets is reached when institutional and retail investors “throw in the towel” and stop pouring cash due to constant losses. In bitcoin’s case, though, people “are still talking about buying on dips that means there is a feeling of hope.” It also signals that the bear market has not yet hit its bottom.
Unlike many other investors who prefer to distribute their capital into real estate, precious metals, or cryptocurrencies due to the current inflationary environment, Mobius said he would instead hold “some cash.” At a later stage, he might invest in Indian stocks in the building-materials sector and software and medical-testing sectors.
In 2020, Mobius claimed that guessing what bitcoin’s USD valuation will be after a certain period of time is much similar to winning a lottery – or simply gambling:
“[Bitcoin’s price is] based on no reliable information … [It’s rise is a] casino operation based on all sorts of rumors and speculation.”
In the past, there have been moments when the primary cryptocurrency has moved relatively at the same pace as gold and the S&P 500. In fact, bitcoin’s price charts have been much similar to the aforementioned index that follows the performance of America’s 500 most powerful publicly-traded firms in the past months.
According to Mobius, though, one should not rely on such correlations as bitcoin has a character of its own, and trying to forecast its future price is a “loser’s game.”
Featured Image Courtesy of Money Inc
