Brett Heath, CEO of Metalla Royalty & Streaming, has warned that cryptocurrency will “lead the charge into the next financial crisis” and questioned Bitcoin’s genuine intrinsic value.
Brett Heath, CEO of Metalla Royalty & Streaming, a precious metals royalty and streaming company, has warned that cryptocurrency would “lead the charge into the next financial crisis.”
Metalla Royalty & Streaming is a Canadian company that was created in 1983 and has a net worth of about $500 million. Metalla provides exposure to precious metals through royalties and streams in gold and silver.
Heath compared bitcoin to the tech-induced meltdown of the early 2000s and the 2008 mortgage crisis in an interview with financial news website Kitco News on May 28, saying that:
“When you look back over the last few decades and consider all of the financial crises that have occurred, you’ll notice that they all share a few characteristics. One of them is the widespread adoption of a new financial product or technology that isn’t well-understood.”
“If we go back to the mortgage crisis of 2008 […] we had the widespread adoption of mortgage-backed securities, often known as Mortgage – backed securities. And then it crashed, which was a tremendous problem,” he said, after the public had welcomed this new financial product.
The CEO referred to cryptocurrencies as a “permit for the private sector to generate money,” questioning the amount of liquidity pushed into the market since the start of 2020.
Heath compared the M1 — total liquid money in circulation — in the United States to the M1 in the United Kingdom, observing that the M1 had “increased by four and a half times” since January 2020. The M1 increased from $4,018 billion in January 2020 to about $18,935 billion in April 2021, according to the Federal Reserve. Heath stressed the following:
“That’s a big shift in such a short time. However, if you look at the whole market capitalization of cryptocurrencies, it’s more than tenfold.”
Heath appears to be concerned about systemic danger from widespread investment in an asset class that he believes has “no inherent value,” with the final result being a sell-off similar to the early-2000s tech bubble;
“You better believe there will be some big financial implications when that huge amount is wiped out of digital wallets across the world,” he warned.
The proponent of precious metals appears unconcerned about forecasts that Bitcoin would overtake gold as a store of wealth. He also questioned if Bitcoin’s maximum supply of 21 million creates scarcity or value, pointing to other, lower-value cryptocurrencies that are backed by greater technology:
“How about the other 10,000 cryptocurrency-related tokens and coins that exist now, many of which have better technology, provide more privacy, and consume a lot less energy?”
“What’s the value or what’s actually that inherent worth when there’s so much?” he continued.