Brett Heath, CEO of Metalla Royalty & Streaming, a precious metals royalty and streaming firm, has cautioned that cryptocurrency would “make a push towards the next economic meltdown.” Metalla Royalty & Streaming is a Canadian company that was created in 1983 and has a net value of about $500 million.
Metalla provides exposure to precious metals via royalties and streams in gold and silver. Heath linked bitcoin to the tech-sparked catastrophe of the early 2000s and the 2008 financial meltdown in an interview with financial news portal Kitco News on May 28, saying that:
“When you go back over the previous several decades and consider all of the financial collapse that have occurred, you’ll notice that they always share a few characteristics. One of them is the growing popularity of a new financial product or technology that isn’t well-understood.”
“Revisit to the housing crisis of 2008 […] We had the widespread adoption of mortgage-backed assets, collateralized debt obligations,” he said. And then it fell after the public had accepted this new financial product; it was a big issue.”
The CEO referred to cryptocurrencies as a “permit for the private sector to generate money,” questioning the degree of cash pushed into the marketplace since the start of 2020. Heath compared the M1 — total liquid money in existence — in the United States to the M1 in the United Kingdom, observing that perhaps 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, per the Federal Reserve.
Heath stressed the following:
“That’s an incredible increase in a very short span of time. However, if you check at the whole market cap of cryptocurrencies, it’s more than tenfold.” Heath seems to be concerned about structural danger from widespread participation in an asset category that he believes has “no inherent value,” with the final consequence being just a sell-off akin to the early-2000s tech bubble: “You better expect there are bound to be some big financial implications when that much money is flushed out of digital wallets throughout the world,” he warned.
The advocate of precious metals is unconcerned about forecasts that Bitcoin would overtake gold as a store of value.
He also challenged whether Bitcoin’s low quantity of 21 million creates supply shortage or value, pointing to other, lower-value cryptocurrencies bolstered by improved technology: “What about the rest of the 10,000 crypto-related tokens and coins that currently exist, many of whom have superior tech, good anonymity, and use a considerably low energy?”
“What’s the value or what’s actually that inherent worth when there’s much more?” he asked.
