Stocks could get a lot worse as the crypto meltdown is a 'tail wagging the dog,' says top investor Mark Mobius

• The crypto meltdown is "a tail wagging the dog" for the stock market, according to veteran trader Mark Mobius.
• "I think things could get a lot worse, and the main problem of course is the cryptocurrencies," Mobius told CNBC Tuesday.

The S&P 500 is down over 21% so far in 2022, but the market could spiral even lower as crypto continues to sell off, according to top investor Mark Mobius.

Crypto prices fell further Tuesday, and stocks reversed early gains to turn negative. Bitcoin even briefly dipped below $21,000.

"This is a very unique situation where billions of billions of dollars have been put into cryptocurrencies," Mobius, a veteran trader and founder of Mobius Capital Partners, told CNBC. "And now it's a tail wagging the dog. As you can see, bitcoin goes down, the S&P 500 goes down. It's a very unusual situation."

In fact, "I think things could get a lot worse, and the main problem of course is the cryptocurrencies," he added.

US stocks traded deep in the red Monday, as investors weighed concerns of an economic recession, high inflation, and rising interest rates.

Meanwhile, the crypto market cap dipped below $1 trillion on Monday for the first time since February 2021. Bitcoin has cratered roughly 65% since reaching an all-time high above $69,000 in November, and that has dragged on the broader crypto market.

Cryptocurrencies are in the midst of a massive sell-off as investors shed so called risk-assets as the Fed gets increasingly hawkish with its monetary policy.