The Bitcoin price crash will be followed by 14x returns; The Fed Will Rule Inflation – Anthony Scaramucci
Bitcoin has fallen more than 50% from its November 2021 highs, but long-term investors shouldn’t worry about the cryptocurrency’s ability to reach its maximum potential, says Founder Anthony Scaramucci. of SkyBridge Capital and former White House communications director.
Scaramucci was previously a critic of cryptocurrencies but has since changed his mind about digital assets. Now, SkyBridge Capital manages funds that invest directly in bitcoin and cryptocurrency companies.
The First Trust SkyBridge Crypto Industry and Digital Economy ETF has $6.4 billion in assets under management as of June 2021.
Speaking to Michelle Makori, editor of Kitco News, Scaramucci said Bitcoin’s true value lies in its growing network.
“Basically, you can value network-tied bitcoin. Remember what Robert Metcalfe, the MIT professor, once said, the fax machine probably isn’t worth anything, but 100 million of them are probably worth something. The network itself is worth something,” he said.
The price of Bitcoin will eventually rise to a point where the market value of Bitcoin exceeds that of gold, he said.
“When you just look at it from a box-checking exercise on the store of value, Bitcoin hits harder than gold, but again, it’s early days. And so, this is an early adoption story, it’s going to come with volatility. I believe when bitcoin matures it will be more valuable than gold due to all the technical properties associated with it. In 10 years I will make a prediction, that Bitcoin has a larger market cap than gold. It took 5,000 years for gold to reach its current market capitalization. Bitcoin will surpass that in less than 25 years from its inception,” he said.
Most estimates have the total market value of gold in circulation between $11 trillion and $13 trillion.
“I think eventually Bitcoin will be worth half a million dollars and it will take four to five years. The journey will be difficult, but it will certainly be worth it,” he said.
Importantly, Bitcoin’s user base will eventually grow to over a billion people worldwide as adoption takes off, Scaramucci said.
On the economy, Scaramucci said inflation will eventually come down.
“I am in the aberrant community. I think it’s a supply chain issue and I think it’s transitory. Now it happens to be longer than the definition of the word transient,” he said.
Furthermore, expectations of three to four rate hikes this year from the Federal Reserve are too aggressive and hawkish, Scaramucci noted, given that technological developments are in fact deflationary for the economy and the Fed will react. appropriately to these deflationary forces.
“Technology is primarily deflationary. So I think Jerome Powell is going to surprise on the upside and I don’t see four to six interest rate hikes this year. You can get one or two, but I don’t think you’ll get much more than that,” he said.
Bitcoin is not yet an inflation hedge, Scaramucci added.
“I do not see [Bitcoin] as a hedge against inflation. What I see as Bitcoin is a technology asset to adopt early. I see this as a technology that has an overall saturation of 2.5% and therefore if you look at other technologies like this they come with very high oscillation and very high volatility” , did he declare.
Scaramucci compared Bitcoin to Amazon when it first went public, when the stock was highly volatile, but has since matured and now sees lower volatility.
For more information on Bitcoin and the economy, watch the video above.
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