Coinbase CEO Brian Armstrong is making a bold prediction about Bitcoin and cryptocurrency.
In a series of tweets, Armstrong says he believes that the stock market rout and the aggressive reduction in interest rates could boost the crypto industry in 2020.
“A down stock market and interest rate cuts may lead to growth in crypto this year. Governments around the world are likely to look to stimulate the economy in any way they can, including using quantitative easing and expanding the money supply (printing money).”
On Tuesday, the Federal Reserve announced that it will cut interest rates by 50 basis points. The development failed to stop the bleeding as both the Dow Jones Industrial Average and the S&P 500 fell nearly 3%.
Armstrong says China’s expanding money supply could be the catalyst that boosts crypto and Bitcoin.
“China has already done this, printing $173B. This may lead to a movement of funds into crypto, that are viewed as a hedge against inflation…
This could be the year where the mindset of institutional investors begins to shift, from crypto as a venture bet, to crypto as a reserve currency.”
Armstrong’s sentiments run contrary to the prevailing wisdom from a number of industry leaders, including Galaxy Digital CEO Mike Novogratz, who recently said Bitcoin is not a hedge against global economic turmoil.
An October research paper from the cryptocurrency prime dealer SFOX may support Armstrong’s theory. It found that Bitcoin could be viewed as a hedge in a select number of countries struggling with crippling inflation.
“While Bitcoin has key attributes that may make it valuable as a hedge against macroeconomic factors in the future, it’s important to keep in mind that it remains today a highly speculative asset class that is extremely volatile.
Bitcoin may be seeing some usage as a hedge against inflation in countries like Venezuela (which represents a unique case study) or against monetary policy, but we’re still a long way from widespread adoption.”
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