Peter Schiff sums up general market malaise, as DCG CEO Barry Silbert touts Bitcoin as a safe harbor for investors.
As the British pound collapses, bond prices decline and interest rates rise, Digital Currency Group CEO Barry Silbert says Bitcoin will become the safe haven asset of choice.
As stock markets slumped on September 27, 2022, with the S&P 500 down 1% by the end of the day and the tech-heavy Nasdaq down 0.6% on Monday following the highest reported yields for 10-Treasury notes years, maximalist gold and Bitcoin bear Peter Schiff predicts that the Federal Reserve will follow in the footsteps of its UK counterpart and introduce quantitative easing:
“The Bank of England has already pivoted. As collapsing bond prices and rising rates threatened a financial crisis, the BOA announced a new QE program to print pounds and buy #gilts. Record UK inflation will now soar. Which central bank will blink next? Hint, rhymes with Ted,” Schiff tweeted.
Schiff, known colloquially as the “gold bug,” has been a vocal critic of Bitcoin, choosing instead to present gold as the superior inflation-resistant safe-haven asset.
While Schiff’s prediction about the 2008 financial crisis came true, his views on inflation as a rise in money and asset prices leading to increases in consumer prices have been criticized by the award-winning economist Nobel laureate Paul Krugman, who believes in the consumer price index as the measure of inflation.
Krugman believes that the Fed’s money-printing exercises are not used to pay government bills in a country like Argentina, but to keep prices rising at a predictable rate of around 2% each year. Therefore, the effect of inflation in those countries is not comparable to the United States.
It Has not yet Reached Critical Mass
On the other hand, DCG CEO Barry Silbert tweeted that the world’s largest cryptocurrency would become the world’s new safe-haven asset amid broader macroeconomic turmoil.
In fact, Bitcoin rallied early on September 27, 2022, when the US dollar briefly weakened before falling with the S&P 500 below $19,000. It has rallied with the Dow Jones Industrial Average, and is trading at approximately $19,000 at press time.
While this shows a growing correlation with equities, SkyBridge Capital CEO Anthony Scaramucci argued earlier this year that Bitcoin will not become an inflation hedge until the number of Bitcoin wallets increases to 1 billion or plus.
Others, like Gemini co-founder and billionaire Tyler Winklevoss, believe that the properties of Bitcoin dictate that it should react differently to stocks, and that any existing correlation between stocks and Bitcoin exists only because Bitcoin is still in its infancy as a class of active.
Investment Horizon is Key
Some experts believe that Bitcoin’s breakout from stocks on September 26, 2022 is a sign that the fundamentals are right for the cryptocurrency, ahead of a price surge.
Investors tend to shy away from cryptocurrencies when less risky investments such as bond yields rise. But when long-term bond yields decline, known as a bond yield curve inversion, investors may still see a long-term opportunity presented by low crypto prices.
This means only one direction for Bitcoin: upwards.
By Audy Castaneda
