Crypto has a bright future as people lose faith in central banks, says billionaire
Crypto is making a positive noise as more people lose faith in central banks, says Billionaire hedge fund investor Stanley Druckenmiller.
Druckenmiller is confident in the return of crypto, especially with the recent state of the global economy, as the world battles both recession and inflation.
Druckenmiller was recently interviewed by CNBC and he criticized the radical monetary policy imposed by the US Federal Reserve.
He said:
“I was just incredibly frustrated by what looked to me like a Fed that was just taking incredible risks.”
Did the Fed trigger the biggest asset bubble in history?
In addition, Druckenmiller says that recent actions taken by the Federal Reserve triggered the largest asset bubble in history. He also warned that economic collapse would normally occur after these bubbles.
On the other hand, the Fed dismissed problems surrounding inflation at the time, stressing that it was not included in their mandate.
Bitcoin apparently boomed in 2021, but it crashed the following year following the Fed’s monetary policy that aims to stop inflation in 2022. In June, the annual CPI rose 9.2%, but has now declined to 8.2% according to August data .
While the hedge manager is satisfied with the way the central bank is managing to circumvent inflation, he is skeptical that they can do it next year without experiencing a recession. Overall, Druckenmiller is not so confident about the SEC’s measures to reduce inflation.
Further, Druckenmiller pressed on, saying:
“Let’s see what happens if we have a hard landing… You have to kill the dragon. And the chair is right. You’re probably going to be in some pain.”
This point is validated by Fed Chairman Jerome Powell, who acknowledges that fighting inflation will require consistency in terms of what they refer to as “below-trend growth.”
Druckenmiller sure that Crypto will climb higher
At this point, Druckenmiller pointed out that he is steering clear of Bitcoin and other cryptocurrencies after further tightening by the Fed.
On the brighter side, he predicts that the value of cryptocurrency is bound to rise as central banks change course in line with what the Bank of England has planned to adopt.
Cryptocurrency will have a renaissance, especially with waning trust in central banks and many people turning their heads to what crypto can offer.
Like gold, Bitcoin is also seen as a hedge against inflation. More so, the crypto is even considered to be far superior compared to gold, heralding it as “the new global money” that drives many central banks to avoid it like the flu.
The billionaire businessman and investor believes that the consequences of the central bank’s immobility for several months will linger and affect the economy negatively for a long time.
Crypto total market cap at $908 billion on the daily chart | Source: TradingView.com
Featured image from The Hustle, Chart: TradingView.com
