Investment Adviser Bernstein Sees Crypto as a ‘Monster’ Bubble — Warns Markets Could Drop 90%

The CEO of investment management firm Richard Bernstein Advisors warns that cryptocurrencies are the biggest financial bubble in history. He advises investors to stay away from “bubble assets,” which include cryptocurrencies.

Richard Bernstein, CEO of Richard Bernstein Advisors (RBA), shared his view on where the crypto market is heading and how investors should approach 2022 in an interview with CNBC Friday.

Bernstein is also the founder and chief investment officer of RBA, an independent registered investment manager. He has over 39 years of experience on Wall Street. RBA manages equity and asset allocation of portfolios at several of the world’s leading broker-dealer firms, such as Merrill Lynch, Morgan Stanley, Ameriprise, UBS, and Envestnet. The firm also manages assets on behalf of several large institutional investors.

The CEO was asked what assets investors should be avoiding and how they should enter 2022. He explained that “the way to think about the markets is to think about it as a seesaw,” adding:

On one side, we have all that I would call the bubble assets: tech, innovations, disruptions, cryptocurrencies — that whole group. And on the other side of the seesaw, you have literally everything else in the world.

“Looking at 2022 into 2023, you want to be in the ‘everything else in the world’ side of that seesaw because that’s where the opportunity is. That’s where there’s scarcity of capital and when we have scarcity of capital that’s where your returns are higher,” the investment adviser described.

Regarding bubbles, Bernstein was asked where the biggest risks are. He replied:

I think cryptos are the biggest financial bubble ever in history. I think this is just a monster one.

Bernstein speculates that cryptocurrencies could fall as much as 90% just like some tech stocks during the 2000 bubble. “Once again one has to look at history. In the tech bubble, people said the exact same thing when tech stocks were down 30%, 35%, 40% — except that was only the halfway point. They went down about 75%, 80%, 85%, 90%.”

The founder of Richard Bernstein Advisors concluded: “I think one wants to wait to look at the true fundamentals and look at the valuations before deciding that this is all over.”

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