Crypto is making positive noise as more people lose faith in central banks, says billionaire hedge fund investor Stanley Druckenmiller.
Druckenmiller is confident with crypto’s comeback, especially with the recent state of the global economy as the world is battling both recession and inflation.
Druckenmiller was recently interviewed by CNBC and criticized the radical monetary policy imposed by the US Federal Reserve.
He said:
“I was incredibly frustrated with what looked to me like a Fed that was just taking incredible risks.”
Did the Fed cause the biggest asset bubble in history?
Additionally, Druckenmiller says that the recent actions taken by the Federal Reserve triggered the largest asset bubble in history. He also warned that economic collapse would typically follow such bubbles.
On the other hand, the Fed dismissed the problems surrounding inflation at the time, stressing that it was not included in its mandate.
Bitcoin obviously grew in 2021, but crashed the following year after the Fed’s monetary policies that aim to reduce inflation this 2022. In June, the annual CPI increased by 9.2%, but now s ‘has reduced to 8.2% according to August data.
While the hedge manager is pleased with how well the central bank is able to stave off inflation, he is skeptical that they can do so next year without experiencing a recession. Overall, Druckenmiller doesn’t have as much confidence in the SEC’s moves to reduce inflation.
Furthermore, Druckenmiller went on to say:
“Let’s see what happens if we get 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 Jerome Powell, chairman of the Fed, acknowledging that fighting inflation will require consistency in terms of what they call “below-trend growth.”
Druckenmiller is confident that crypto will rise higher
At this point, Druckenmiller noted that he is moving away from Bitcoin and other cryptocurrencies after further tightening by the Fed.
On the brighter side, he predicts that the value of the cryptocurrency is bound to rise once central banks change course similar to what the Bank of England has planned to enact.
Cryptocurrency is set to experience a renaissance, especially with trust in central banks waning and many people turning their heads to what cryptocurrency can offer.
Like gold, Bitcoin is also seen as a hedge against inflation. Moreover, crypto is even considered to be far superior compared to gold, heralding it as “the new global money” prompting many central banks to avoid it like the flu.
The billionaire businessman and investor believes the repercussions of the central bank’s immobility over several months will linger and negatively affect the economy 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
