Here’s what could breathe air into crypto’s fire, according to venture capitalist Chris Burniske
A venture capitalist who correctly called the November 2022 crypto bottom believes that the current crisis in the US banking sector is bullish for the long-term prospects of the digital asset markets.
Placeholder partner Chris Burniske writes in a long Twitter thread says his 257,500 followers that the banking crisis is likely to lead to disinflation rather than hyperinflation.
According to the venture capitalist, the Federal Reserve’s Bank Term Funding Program (BTFP), which aims to provide liquidity to struggling banks, will not have the same impact as the fiscal stimulus directly provided to American citizens at the height of the Covid-19 pandemic.
“The current banking crisis is bullish for crypto long term. In the short term we are probably in the eye of the storm, so expect volatility, but the banking crisis has been monetary policy-induced (too much, too fast with rate hikes) and will be ‘solved’ by monetary policy.”
This banking crisis is also more likely to cause disinflation than hyperinflation, in my opinion. Credit dries up. BTFP is not the same as ‘stimmies’ – stimulus went straight to consumption, whereas BTFP props up bank balances that are likely to just sit there.”
Burnish says that the resulting disinflation will motivate the Federal Reserve to begin cutting interest rates. According to Burniske, the Fed pivot will likely lead to the resurgence of crypto.
“But disinflation will give the Fed and other central banks cover for lower interest rates, and it will breathe air back into the fire of growth stocks and crypto.”
According to the Placeholder boss, he looking The Fed and other central banks are already lowering interest rates this year.
“The Fed and other central banks will cut interest rates, perhaps even this year, as the market now expects, which will allow existing bonds to rally and voila, banks that are currently struggling will have ‘healthy’ balance sheets again.”
Burnish too says that he is bullish on blockchain and crypto regardless of the macroeconomic landscape.
“I’m as long crypto as I’ve ever been – blockchains are critical infrastructure that provide solutions to the problems our society faces, including AI. As a species, we eventually find our way, even if the journey is full of sticks and stones. If you look up, it’s blue sky.”
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