‘Biggest Bubble Ever’—Serious Crypto Warning Issued As The Fed Boosts The Price Of Bitcoin And Ethereum

‘Biggest Bubble Ever’—Serious Crypto Warning Issued As The Fed Boosts The Price Of Bitcoin And Ethereum

Bitcoin and cryptocurrency prices have climbed following a closely-watched Federal Reserve announcement that revealed it will accelerate the winding down of its pandemic stimulus measures.

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The bitcoin price soared toward $50,000 per bitcoin, with the ethereum price also leaping, after Fed chair Jerome Powell said the U.S. central bank will cut its monthly bond-buying at twice the rate that he outlined just six weeks ago and sees three interest rate hikes in 2022.

Now, influential investor Rich Bernstein has warned bitcoin and cryptocurrencies are the biggest ever financial bubble—even as crypto investors predict the price of bitcoin, ethereum and other cryptocurrencies will continue to climb.

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"Cryptos are the biggest financial bubble ever in history," Bernstein, the chief executive of Richard Bernstein Advisors told CNBC. "This is just a monster one."

The bitcoin price has rocketed at a blistering pace over the last year, with some smaller cryptocurrencies, including ethereum and its many rivals, making even bigger gains as traders and investors pile into the burgeoning market.

Bernstein also warned over what he called "tech, innovation and disruption" investments that he thinks could crash as badly as they did when the dot com bubble burst in the early 2000s.

"On one side, we have all that I would call the bubble assets: tech, innovation disruption, cryptocurrencies," said Bernstein. "On the other side of this see-saw, you have literally everything else in the world. I think if you’re looking at 2022 into 2023, you want to be in the everything else in the world side of that see-saw."

Cryptocurrencies, asset prices and stock markets have soared over the last few years as central banks around the flood markets with cash and cheap debt to ward of the economic damage wrought by the Covid-19 pandemic and lockdowns put in place to try to contain it. Some investors have warned that as central banks scale back their unprecendent support, prices will crash.

However, bitcoin, ethereum and other cryptocurrencies rose yesterday after the Fed revealed a more hawkish stance than expected, climbing along with tech stocks.

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"Despite these new changes in policy usually being bearish for cryptocurrencies as there are a risk-on asset class that thrives in a low interest rate environment, digital assets reacted positively to the meeting as it appears the news was already priced in and this greater clarity was welcomed by investors," Marcus Sotiriou, analyst at the U.K.-based digital asset broker GlobalBlock, adding he expects continued institutional bitcoin-buying suggests the bitcoin price will hit new all-time highs in 2022.

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