Bitcoin Could Increase 40% By Year’s End: Blockchain Founder

Welcome to the weekend. Phil Rosen here, writing to you from Manhattan.

I’m a bit of a skeptic when it comes to digital assets, but so far this year, bitcoin has been the most successful asset by a landslide – up more than 73%.

I caught up with a blockchain executive to find out why this upswing could see more upside as the economy slows down.

If you have any suggestions for who I should interview next, let me know on Twitter @philrosennor email me at [email protected].

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Bob Ras is the co-founder of the blockchain company Sologenic. This conversation has been lightly edited for length and clarity.

Phil Rosen: What is the impact of the banking crisis and the Fed on the outlook for bitcoin?

Bob Race: As major banks have collapsed, it seems clearer every day that these investors see bitcoin as a hedge because of its decentralized censorship resistance and lack of counterparty risk.

There are growing expectations that the Fed will loosen monetary policy and effectively inject much more liquidity into the market to prop up the financial system. And bitcoin is the frontrunner in this scenario, pointing to a future that is actually a return to relatively low prices.

I wouldn’t be surprised if $40,000 could be reached by the end of this year.

What has driven bitcoin’s sharp rise to start 2023 so far?

A big reason why bitcoin has performed so well was that it only got really oversold during the collapse of FTX.

In addition, there is chain evidence that more and more people and institutions have been accumulating bitcoin during the downturns, which essentially translated into a supply shock.

With so few sellers left, any increase in demand has a big impact on price.

What is a downside risk going forward that could weigh on bitcoin prices?

The biggest risk would be a severe credit crunch causing a rapid contraction.

In such a scenario, all assets would have a correlation of one with each other, including bitcoin and even gold. I’m not sure such a scenario would happen, but it is possible and would trigger a huge amount of volatility, not just for bitcoin, but all markets.

Read the full story on bitcoin’s upside.

What do you think of Ras’s take on the world’s most popular cryptocurrency? Let me know.

And here are the top stories from the markets this week:

1. A share portfolio created by ChatGPT outperforms the best mutual funds across the UK. The theoretical portfolio created by Finder.com includes 38 stocks, and it has generated a 4.9% return over eight weeks. Here is the top inventory.

2. Top economist Mohamed El-Erian warned of potential collateral damage from the First Republic-JPMorgan deal. The Wall Street giant agreed Monday to buy most of the battered firm’s assets — but El-Erian sees four critical unintended consequences that could materialize as a result.

3. UBS analysts just named 40 cheap stocks they expect to outperform in a recession. Weaker economic growth will help defensives dominate over cyclical conditions, and this collection of relatively affordable picks looks set to fare well in a weaker landscape.

4. Russian gold is now flooding the United Arab Emirates, Hong Kong and Turkey. Sellers have had to find new buyers for the key metal now in light of war sanctions from the West. Major gold buyers such as HSBC and JPMorgan have avoided doing business with Moscow – leaving billions of dollars worth of gold in need of new landing spots.

5. Nobel economist Paul Krugman does not think dollar dominance is worth much to the US. The notion is overrated, in his view, and he thinks it’s best to just ignore all the dollar judges out there: “Or better yet, think about what your hyping a non-issue says about your own judgment.”

6. Apple attracted $1 billion to its new high-yield savings account in four days. The iPhone marker debuted the account last month, with a return of 4.15%. And the number of people who have signed up so far represents only a fraction of total iPhone users.

7. The nation’s leading market watchers and political pros are concerned about a credit crunch and a spiraling commercial real estate sector. It is an uncertain time for the US economy, with growth slowing and inflation stubbornly high. Here’s what three experts expect to come down the pipeline.

8. Yankees legend A-Rod learned two key rules on investing from Warren Buffett. Alex Rodriguez told Bloomberg that he became business partners with the billionaire after the Berkshire boss insured his multimillion-dollar gambling contract. The pair made it a habit to meet in Omaha — and Rodriguez still carries the lessons with him today.

9. These 20 Defensive Stocks Can Help Your Portfolio Against a Downturn. Morgan Stanley’s top strategists warned that a strong earnings season could convey a false sense of security. But they see this group of names as a potential corner of opportunity.

10. BlackRock bond manager Rick Rieder manages $2.7 trillion. He told us how he’s positioning cash for a shrinking economy and the portfolio strategy he’s using to avoid losses right now.

Curated by Phil Rosen in New York. Feedback or tips? chirping @philrosenn or e-mail [email protected]

Edited by Max Adams (@maxradams) in New York.