Video Transcription
Bloomberg Intelligence Senior Strategist Discusses Implications of Banking Crisis on the Bitcoin Market
The ongoing banking crisis seems to be a pivotal moment for the global financial system and for crypto After the shutdown of two major crypto-friendly bags, the position of the crypto industry in the US looks increasingly precarious. On the other hand, confidence in traditional bags has been shaken and people are forced to look for alternatives. Bitcoin an asset without counterparty risk that can be self-casted may be that alternative. So what are the broader implications of the banking crisis on the crypto market? Is this the catalyst that will kick off the next Bitcoin bull run To find out. I talked with Microgron the senior commodity strategist at Bloomberg, Intelligence, I’m Giovanni, and on this show, we challenge the ideas that shape the world of crypto. In each episode, we assess a crypto narrative, a macroeconomic outlook or a potentially disruptive technology. Only the most solid ideas will make it to the other side.
Banking crisis defining Bitcoin as global digital coI just want to get a sense of what you think about the latest banking crisis and its relation with the crypto markets. So, in a recent interview you said that the current banking crisis is defining the value of Bitcoin. Can you explain exactly what you meant by that? So Bitcoin was born out of the last significant financial crisis or the Great Financial Crisis in 2009, and I think this one’s in the process of defining Bitcoin as global digital collateral? Now that’s the current state Bitcoin has done very well bouncing back above 25,000 resistance At the time we’re taping this on Wednesday, it’s around 27,000, while the stock market still is under pressure – And I think what’s happening – is we’re seeing a significant rally in Bitcoin this year.
How Bitcoin can outperform all cryptocurrencies after the banking crisis | Analyst explains
llateral, leading to significant rally in 2020.Bitcoin Gains Ground as a Global Digital Collateral Amidst Financial CrisisUp to about 73 %, Obviously it was oversold last year, but partly because people are realizing that it’s becoming more like gold and US Treasury bonds, but just a higher beta version of gold And it’s gaining accolades as maybe not so much a store value. Yet. But it’s global digital collateral in the world, that’s going digital, So this financial crisis is quite significant and it’s defining it And I think people are realizing the thing about Bitcoin, it’s no one’s project and no one’s liability and it’s completely independent, like gold. The thing is, it has a definable definition, diminishing supply and it’s so low as far as adoption in so early days – and this seems to be the trigger The banking crisis.I think when people realize “ – Oh my money may not be so safe in a fractional reserve banking system. It might be safer in a fully collateralized, stablecoin or crypto dollar .”. It seems to be hitting that inflection point that I’ve been looking for a while.
Bitcoin transitions from hedging against inflation to hedging against banking risks
I’M just kind of during the headlights watching “ Wow. Is it really finally happening “ There used to be a narrative that defined Bitcoin as a hedge against inflation. Would you say that now this narrative has transitioned into Bitcoin as a hedge against banking risks? I think it’s going there because I never believed in the hedge against inflation because that’s so long term Bitcoin needs to be around for I think decades before that happened, It’s still just a baby. It’s just evolving! It’s so early days. It’s such a small portion of global portfolios, But as far as a potential hedge against banking issues, yeah, I mean it’s coming up there like with gold and Treasury bonds. Now that’s just a high beta high-risk version, but I think it’s people are realizing “. Well, I really probably have to have some of this, particularly if I’m looking to get away from risk assets like the stock market.
Expert dismisses fears of US authorities “debunking” cryptocurrencies as short-term fear-mongering
This Bitcoin stuff is if the stock market, if risk assets, do recover, it’s probably gon na outperform “.I just want to touch upon some of the fears that have been going around for quite a while in the US, because a lot of people were talking about this Operation. Choc Point 2.0, which is basically this narrative according to which the United States authorities are trying to debunk crypto in the US. How big of a threat is that? Are you not concerned about this trend? I’m surely concerned, but I think it’s much more short-term fear-mongering and it’s typically not going to last. It’s part of what this is an overwhelming, rapidly advancing technology and most astute smart people in this country get it Some don’t They might be incumbents in power, but, like all the major changes in history, even like the key thing, the obit development of Eurodollars, that Was not really the trading of US dollars offshore and banks? Was that really supported by the US government, we’re seeing?
Bitcoin Growth May Face Pushback from Current Administration, But Long-Term Adoption Unstoppable Despite Fed Policies, Banking Crisis
I think this is just overwhelming. So I think I don’t know where that’s going to go. I do know if the current administration continues to push back. They’re likely to be voted out in two years anyhow like a chairman of the SEC, But two years left, and I don’t know when I had to define that so much. But it just means that it’s going to be a pushback in the shorter term. But in the bigger picture, it’s really going to be hard to stop. This technology. We know that the growth of the price of Bitcoin is still very sensitive towards the US, and Fed monetary policies and how aggressively these monetary policies are being handled. So a lot of people saw this banking crisis as this turning point where the Fed is going to say “, We have been tightening too hard, and now we are basically being hit by the collateral effect of that .”. So a lot of those banks collapsed because of the two aggressive hikes of interest rates that have been conducted in the last few months.
Fed hikes rates despite potential recession concerns in the global banking crisis
Today we saw that all the eyes were pointed at the Fed, seeing whether the Fed was going to hike more or stop and try to prevent this banking crisis from continuing. So what is your reaction to the Fed’s decision today? They hiked rates, again. The ECB did a week ago, 50 basis points and it’s probably the last hike Markets are pricing for easing a little bit of easily, not a lot yet, but the bottom line is they’re, potentially tilting us towards a significant recession. Potentially depression, I mean the hike into you can’t be a hawk in a bank run is the quote from my colleague, Tom Orlik He’s our chief economist, and he wrote that a little while ago and they just did, Can we were having a big run. So the ECB, this is a global bank run and it potentially this country is just getting started. Remember it’s basically only been a year and one week since the first hike, the most aggressive hike on a global basis ever and there’s this rule of long and variable lags.
Expert predicts official acknowledgment of deflation as recession looms and commodities collapse
So what I see is the bank situation is a tree in the force of what I’ve been pointing out for a while Commodities collapsing. Now, let’s just start getting started, because everything is tilting towards recession, except things like unemployment and unemployment can only go one way. It’s so low, it can only go up, which means the recession is virtually guaranteed. You look at things like the yield curve, so I think the Fed is just way far behind like they were so far behind in inflation. Now that inflation is potentially collapsing and I’ll point out that in a second, the leading indicators peaking housing, the banking crisis, and commodities means they should have stopped and they still hiked rates. So I fully see looking forward we’re going to have the official acknowledgment of deflation other from government statistics, not from forward-looking things like my commodities and the Fed tightening So they’re.
Banking crisis accelerates the next crypto bull run, but S&P 500 pressure could impact Bitcoin, says an expert.
So far, behind the key thing we’re going to end with we’re going to find out what and get is now By this time next year, Giovanni when we’re talking, I’m pretty sure we’re going to be talking about significant enduring deflationary forces. The Fed, not easing with the ease that it has in the past. Everybody is waiting for the moment when the next crypto bull market will kick off. So has this banking crisis accelerated this perspective, or has it made it far further away? What is your view on this? I think the answer is yes, it’s kicking off the next bull run, but it’s very much subject to the ebbing tide of the stock market. We’re talking right now with the S & P 500 around 4,000.I feel expected to go to 3,000 in a recession, a normal recession, which is predicted the highest probability since 1982 from the yield curve, And that’s going to be a pressure factor in Bitcoin but potentially you’re hitting that inflection.
Bitcoin’s Sustainability Above $25,000 Could Indicate Takeoff Amid Recession, Says Expert
Now, where this recession is going to be great for things like gold and long bonds And the thing is – is Bitcoin in there?I think it’s hitting that, but it’s just hard to say for sure, But I think the more the Bitcoin can sustain above 25,000 and the more the S & P 500, potentially pressures below 4,000. You can have an indication that Bitcoin is just going to take off and we have to get there. To touch upon your view on the crypto dollar, so the stable coins dollar-backed stable coins. What we saw is that a very respected, stable coin USDC had a significant amount of their reserves in a bank that was a Silicon Valley bank. It collapsed and it lost its bag for a little while So that kind of showed how these crypto dollars can also be very vulnerable to this sort of crisis. What is your view on that? It’S funny. It’S unique that the In the banking system, they did it in banks outside the U.S. and created the Eurodaux system. This is happening in crypto dollars and it’s happening fast.
Bitcoin Expected to Continue Outperforming Ethereum Amidst Global Economic Recession, Says Analyst
The technology is overwhelming and we know that now Ethereum is going to turn fully proof of stake by allowing staking with the Shanghai upgrade. What do you think Is Ethereum going to outperform Bitcoin this year? So far, Bitcoin has outperformed virtually all crypto assets and if my base case of a severe global economic reset recession pans out, I think Bitcoin will continue to outperform. I see Ethereum right now, stuck between a thousand and two thousand. Now it’s at 1700 and 2000 is very good resistance. It is the base layer for the tokenization of crypto dollars and things like that. But now we’re in that stage, where I think, if I’m correct, the stock market goes closer to three thousand S & P 500 and gold and treasury bonds. Outperform in this significant recession in the US, Then I think Bitcoin will outperform virtually all cryptos, including Ethereum. That’s been the case so far this year, It’s the existing trend and I think it’s going to accelerate more.
Strategist Warns of Economic Hurricane and Predicts Bitcoin to Outperform Other Cryptos.
We have to get through this bump in the road and the bottom line, to remember from my standpoint as a strategist is that it’s my duty to warn people when I see a hurricane coming, I see a hurricane coming economically man, It’s just based on what you see We started speaking about it earlier and it’s central banks tightening despite a bank crisis and despite forward-looking deflationary forces, Bitcoin will probably be the best performer among the cryptos, including Ethereum. Well, Greg awesome Thanks Dr. Mike for giving your outlook in these complicated times. Let’s talk again very soon, Looking forward to it Giovanni, and thanks for having me on