$4.5 Billion Fund Strategist Warns Sudden Rate Drop Could Crush Dollar, Boost Bitcoin And Gold
Fidelity macro expert Jurrien Timmer says a Fed pivot back to lower interest rates could ignite new bull markets for gold and Bitcoin (BTC).
Timber point to his 162,000 Twitter followers that gold and Bitcoin have outperformed virtually every other financial asset so far this year.
He says that an economic scenario could develop where the US government decides that it needs to lower interest rates to make it easier to manage the debt.
According to Timmer, a Fed pivot could hurt the dollar and push BTC and the precious metal skyward.
“If the country develops an urgent need for lower interest rates to pay for the massive debt stockpile, that could undermine the Fed’s autonomy. In such a scenario, it would be easy to see the dollar weaken and real interest rates depressed again. That would trigger two of gold’s main drivers .And if Bitcoin is gold’s high-octane cousin, it makes sense that Bitcoin is along for the ride.
History shows that when debt burdens become too great, that debt must be devalued, or outgrown by increasing nominal GDP (gross domestic product). The 1940s were a useful history lesson in this regard. Below market rates could again become the lowest hanging fruit for policymakers on both sides of the aisle who want to preserve their purchasing power in an era or rising debt costs. Maybe this is what gold and Bitcoin are telling us?”
Timber too says that historically the Fed is already “moderately restrictive” when it comes to monetary policy. However, the macro expert mean that inflation is already receding, suggesting that a Fed pivot may be near.
At the time of writing, Bitcoin is trading at $26,845.
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