The cryptocurrency market had one of its worst weekends, with volatility pushing the price of the largest cryptocurrency below $18,000. Volatility has rocked the broader market in 2022, with various concerns warning that there may be more volatility ahead.
Likewise, Jim Chanos, a well-known investment manager and market player, expects more pain to come, as few had expected interest rates to continue to rise. On Wednesday, June 15, Chanos discussed his views on interest rates on Bloomberg’s “Odd Lots” podcast.
“That’s the one thing that people are not prepared for still, is interest rates resetting meaningfully higher, because it hasn’t happened in most investors’ lifetimes. The idea that actually interest rates are not going to be 2% or 3% for the foreseeable future is going to be hard for a lot of investors to deal with.”
Who is at fault?
Chanos believes that the Federal Reserve (Fed) is to blame for the current volatility, despite the fact that the Fed’s monetary policy was eased at the end of 2018. Low-cost or no-fee trading platforms have also contributed to the speculation ; With the development of Special Purpose Acquisition Companies (SPACs), which raise billions of dollars daily, the financial world has reached its peak.
He stated that he has been surprised by how much retail investors continue to desire to speculate since November. Cathie Wood received inflows for the majority of the first quarter, with some of them being record inflows.
New SPACs raised an average of $3 billion in cash every night for a few weeks. And it was the same as the savings rate in the United States. The SPACs thus monopolized the entire American savings rate for a short period of time, which seemed to him the height of absurdity.
Furthermore, after being short on Coinbase (NASDAQ: COIN) since March of this year, Chanos is not overly enthusiastic on the cryptocurrency sector.
