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Student loans, credit card debt, mortgages, business loans and all kinds of debt are putting tremendous pressure on the US stock market. In the long run, Mark Yusko believes that emerging markets and Bitcoin are viable long-term bets for investors.
Mark Yusko, President and Chief Executive Officer of Morgan Creek Capital Management, has expressed concern over the "merger" of the US stock market and warned about the state of the market in which companies accumulate debt that they can not no longer allow yourself.
While various types of debt reached an unprecedented high, Yusko said the pressure on the US economy would lead to an explosion of the credit bubble, seriously affecting the market.
Last week, the Securities and Financial Markets Association announced that US corporate debt was $ 9 trillion, double the debt in two years.
Yusko m said:
"I think this year will continue to melt slowly like an ice cube melting. I think that next year, with the economic downturn, the situation will get worse, probably a double-digit drop and the big year is 2020, when the credit bubble begins to burst. All companies have relied on cheap debt, they have over-indebted, 14% of S & P companies can not pay their debt with the next three years of ebitda.
Is Bitcoin a good bet?
In the long run, the CEO of Morgan Creek claimed that Bitcoin was a good asset in a portfolio because, as a decentralized network, the performance of this asset did not depend on larger capital markets.
Over the past eleven months, due to the unanticipated impact of the futures market on Bitcoin price developments among many other possible catalysts, the asset class has suffered a fall of 80 % compared to its historical record value of about 800 billion dollars.
Nevertheless, Yusko pointed out that he was a "big bull" in the long run and that in the years to come, the dominant cryptocurrency would probably get more use, notoriety and uptake, to eventually regain value.
He stated:
"Bitcoin, I love it in the long run. I was wrong, completely wrong, about the impact of futures on the price of Bitcoin. I thought that because they were settled in cash, you could not get a new mortgage and put artificial pressure on prices. I was wrong. You see rehypothecation. You realize that when the rights expire just before the expiry of the futures contracts, there is a lot of pressure in these difficult times. However, as usage increases and people subscribe to the idea that it is a store of value and use increases, we trade every day for $ 4.5 billion worth of Bitcoin, compared to less than 200 million five years ago. So, huge increase in the use, in the long run, I am a big bull. "
Bitcoin remains down nearly 80% from its record of $ 19,500. Given the magnitude of the recent sale, investors entering the Bitcoin market are likely to see relatively rapid gains in the foreseeable future, Yusko said.
20 times the return
Over the next 10 years, as was the case for the Internet sector after the dotcom bubble, Yusko added that a return on investment of 10 to 20 times is possible.
"Over a decade, I think you can earn 20 times your money. I really do. I think it's one of the few asset classes where you have an asymmetric return profile. I think in a year, it's hard to say. "
Selected image of Shutterstock.
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