Ikigai Asset Management’s chief investment officer points to an important event necessary to potentially spark a rally in cryptocurrencies.
In an interview on the Bankless podcast, Ikigai co-founder Travis Kling says that in addition to the US Federal Reserve policies that risk driving the economy into recession, it is the ongoing conflict between Russia and Ukraine that must ultimately be resolved in order to stabilize the macroeconomic picture.
“If you can get some sort of credible treaty in there, it will have reduced that adjustment in commodity prices – they’re already well off the highs – but commodity prices are falling, expectations are being capped, inflation expectations are falling, stocks are rising , cryptocurrencies above.”
Kling believes that leading smart contract platform Ethereum (ETH) will benefit significantly if geopolitical and economic conditions improve.
“That would be the setting for crypto in general and ETH specifically to run extremely hard if all those kinds of lines match up and you end up threading the needle there.
I’m not saying it’s definitely going to happen, but I think that’s the setup.”
The hedge fund manager then discusses Bitcoin (BTC), stating that the top crypto asset by market cap represents much more than a hedge against short-term swings in the consumer price index (CPI).
“You will never find me anywhere publicly saying that Bitcoin was like a hedge against CPI inflation [or] a monetary hedge of inflation.
It is a non-sovereign, hard cap offering, global, immutable, decentralized digital store value. I’ve messed with it 5,000 times at this point.
It is a hedge against the irresponsibility of central banks and governments worldwide.”
Kling concludes his analysis by comparing how Bitcoin reacts to quantitative easing (QE) versus quantitative tightening (QT). In cases of QE, central banks keep interest rates low and increase the money supply, while during QT interest rates rise and supply contracts.
“[Bitcoin] loves QE and loathes QT. We are currently in a QT cycle, but I strongly believe that this is very temporary. The market tells you that it is temporary and that it is closer to being done than in the beginning.
This goes back to my point of moving as quickly as possible from the bottom. I think he is speaking under the pseudonym of Paul Tudor Jones that Bitcoin is the fastest horse.”
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