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Bitcoin (BTC), one of the perhaps oldest cryptocurrencies, along with several other crypto coins and digital assets, is continuously struggling to enter into the existing financial system. The fact that these assets are entirely digital while they are stored and used in a digital wallet, and the transactions are stored in the digital ledger, making them completely anonymous, is a significant concern of the Central Bank and Federal Reserve. These institutions strongly believe that as these cryptocurrencies offer pretty strict anonymity, they could thus give rise to and promote several crimes. As opposed to this and the fact banks against cryptocurrency, there is a strong belief that cryptocurrencies are very beneficial with the pros it offers. In this debate, Alex Mashinsky, the CEO of Celsius Network, has put forward his analysis and speculations on Bitcoin and Federal Reserve.
Expert Speculates On Bitcoin And Federal Reserve
“Bitcoin To Re-test all-time highs on upside, $30,000 on Downside” – Alex Mashinsky.
Interviewer: Given this huge rally that we have had in the past year, it felt like perhaps a little bit of a correction was inevitable. But I guess the question now is how much lower could we go?
Alex Mashinsky: Yeah, so Bitcoin is still the best performing asset class across a ten or five or three year period, and like you said last year did over 300%, so seeing a small correction is probably healthy for Bitcoin. At the same time, we are also seeing Ethereum and some of the other altcoins are close to hitting new highs, so it is not just bitcoin outperforming, and I think there is just a lot of migration of capital from the traditional market, from the bond markets or stock markets into this non-correlated asset class.
Interviewer: And yet there is a lot of skepticism out there, right. We just got the call from UBS Global Wealth Management that given the regulatory threats, not to mention that perhaps we could see more competitors coming from Central Bank issued currencies that Bitcoin could end up being another Netscape or myspace.
Alex Mashinsky: Well, I would differentiate between the two. For example, China is issuing a central digital currency, but they are not promising that it will have limited supply, right, so just like the fed is printing dollars, they will continue printing digital currencies right. The beauty of Bitcoin is that it has a limited supply. Everybody in the world knows that no one can print more of these and that the more people come in and buy Bitcoin, the higher price is going to go.
Interviewer: So who are buying Bitcoins right now, Alex? When it comes to these holdings because that seems to be a little bit of a mystery, there has been more talk than perhaps is institutional investors are in the game now, but at the same time, what about the speculators, and could we see this transitioning from who is holding cryptocurrencies right now?
Alex Mashinsky: Yeah, it is a great question. Celsius is managing just over 5.3 billion dollars. We are the second-largest asset manager in the world. We grew ten times during 2020, right. So, we have seen a huge adoption both from retail from corporate and from institutions. We work with over 350 institutions. So this time, it was not like 2017, where it was a retail mania. This time you are seeing some of the world’s smartest investors and not just looking to diversify the asset class but also generate yield or generate alpha on Bitcoin, Ethereum, and 42 other assets that we manage for them. So this is really a completely new asset class that is now being adopted by a very broad base of investors.
Interviewer: Alex, you lot of pro cryptocurrency Bitcoin argument talks about how over the past couple of months, we have seen more widespread adoption by institutions by individual investors. But when you take a look at data, it is still these Bitcoin whales. These, you know, big buyers that hold most Bitcoin, right. It is all that 2% of these buyers hold up to 95% of all Bitcoin. So what does that tell you about the more, I guess mainstream appeal of this and what does that tell you about the risks for you know still a highly liquid market?
Alex Mashinsky: Well, it is a little misleading because, for example, Celsius has a Bitcoin wallet with over two billion dollars in it, but that does not mean that it is one person. We have 350,000 users that collected or aggregated their coins into this wallet to earn yield. So I think this is not like the traditional equities where you can really point one to one who is the owner. There is concentration in crypto in the Bitcoin ownership, for example. But I do not think it is as high as some of the reports, and what we are saying is, again, this is the first time in history where the retail guy got in on the next big thing ahead of the institution.
The institutions are just now running in, and you saw JP Morgan, for example, just a few days ago recommend Bitcoin for the first time you saw the city recommend Bitcoin for the first time. So the OGs are the people who have been in this business for ten years. We are all retail, right. So they are the ones selling to the institutions.
Interviewer: Right. And that is really interesting to me because you know we saw the likes of Paul Tiller Jones of Draco Miller, you know these big investment Wall Street heavyweights and as you say some of the big banks coming in as well. Nothing fundamentally has changed about the nature of Bitcoin right. It has not suddenly paid dividends. You know it does not accrue interest, but it is really just that these influential investors and banks now believe in the widespread appeal and the legitimacy that has made a difference.
Alex Mashinsky: Well, again, I think the problem is with the monetary system, not with Bitcoin. It is not that there is a mania with Bitcoin. The problem that we have is that half of all the dollars that were ever created were printed in the last 12 months since basically Corona started, and that kind of debasement is making a lot of people nervous. So when they are looking at okay, what are these non-correlated assets that I can buy to move away from the dollar or from the Euro? There are very, very few options. So, now that you are seeing a stampede into Bitcoin of smart investors again, the dollar and the central banks are the ones driving it. It is not the mania and the Bitcoin space.
Conclusion
There is a lot of uncertainty with cryptocurrencies entering full-fledged on the mainstream financial network. A lot of debates on Bitcoin and the Federal Reserve are going around globally. Recently, Federal Reserve Chairman Jerome Powell has clarified that while the Central Bank is simultaneously studying the practicality of a digital dollar, it will not be forcefully launched, unlike the other countries. Additionally, he has noted that when the US launches a sovereign digital currency, it might make cryptocurrencies like Bitcoin and stablecoins, for example, Tether (USDT), unnecessary while believing in strict federal reserve cryptocurrency regulation.
Source: Bloomberg
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