Bitcoin surged to over $ 19,000 in the same week that President-elect Joe Biden’s came Decision to appoint the Keynesian economist Jenet Yellen as the next US Treasury Secretary.
Anthony Pompliano, co-founder and partner of Morgan Creek Digital Assets in New York, noted that Ms. Yellen’s economic management style complements Bitcoin’s bullish fall. in the his note to investors The macro analyst, released on Tuesday, said the former Federal Reserve chairman was tolerant of bubbles and inflation.
“Janet Yellen will likely be Bitcoin’s greatest ally for the next 4 to 8 years,” said Pompliano. “She’s never seen an opportunity to print money that she didn’t like. She has never seen a situation of high inflation that scared her. “
He cited Ms. Yallen’s decision in the years that led to the property market collapse in 2008. She spoke out against the emptying of the bubble, believing the US economy was ready to absorb the shock if it burst. Meanwhile, she also preferred to use the power of the Federal Reserve to lower unemployment and reiterated her keen appetite for inflation.
Bitcoin is up by more than 350 percent from its mid-March nadir. Source: BTCUSD on TradingView.com
Ms. Yellen also defended a $ 3 trillion stimulus package to help cushion the aftermath of the 2008 economic crisis. This led many economists to refer to her as “the dove,” meaning that she gave curbing unemployment priority over lowering inflation.
A Bitcoin-friendly Keynesian
Mr Pompliano noted that Ms. Yellen’s methods were in line with Federal Reserve expectations in the face of the ongoing economic slowdown due to the coronavirus pandemic.
Federal Reserve Chairman Jerome Powell said earlier this year that his office wants inflation above 2 percent. With Ms. Powell chairing the Treasury Department, she would ensure that her regime uses all monetary incentives to lower unemployment.
“Bitcoin will benefit from fear of high inflation whether it actually occurs or not,” added Pompliano.
“If people think high inflation is imminent, they will turn their capital into inflation hedging investments,” he added. “When inflation comes, great. If inflation never occurs, capital flows will drive asset prices up anyway. “
The statements were also based on a large number of companies and investors who transferred part of their cash reserves to the Bitcoin market for fear of inflation. These include Nasdaq-listed MicroStrategy, which bought $ 425 million in BTC, and payment giant PayPal, which has reportedly bought 70 percent of the newly minted Bitcoin offering in the past few weeks.
Billionaire investors Stan Druckermiller and Paul Tudor Jones also invested in the cryptocurrency market as insurance against a falling US dollar.