Fri Fire: Gold & Oil Up, Bitcoin & Crypto Dive
A venture capitalist who correctly called the November 2022 crypto bottom believes that the current crisis in the US banking sector is bullish for the long-term prospects of the digital asset markets.
In a lengthy Twitter thread, Placeholder partner Chris Burniske tells his 257,500 followers that the banking crisis will likely lead to disinflation rather than hyperinflation.
According to the venture capitalist, the Federal Reserve’s Bank Term Funding Program (BTFP), which aims to provide liquidity to struggling banks, will not have the same impact as the fiscal stimulus directly given to US citizens at the height of the Covid-19 pandemic.
“Current banking crisis is bullish for crypto long run. Short-term we’re likely in the eye of the storm, so expect volatility, but the banking crisis has been monetary policy-induced (too much, too fast with rate hikes) and will be ‘solved’ by monetary policy.
This banking crisis is also more likely to cause disinflation, than hyperinflation, in my opinion. Credit is drying up. BTFP isn’t the same as ‘stimmies’ – stimmies went straight to consumer spending, whereas BTFP is shoring up bank balance sheets which is likely to just sit there.”
Burniske says that the resulting disinflation will incentivize the Federal Reserve to start cutting interest rates. According to Burniske, the Fed pivot will likely result in the resurgence of crypto.
“But disinflation will give the Fed and other central banks cover to lower rates, and that will breathe air back into the fire of growth stocks and crypto.”
According to the Placeholder executive, he sees the Fed and other central banks dropping interest rates as soon as this year.
“Fed and other Central Banks will drop rates, perhaps even this year, as the market is now anticipating, which will allow existing bonds to rally and voila, banks that are currently struggling will have ‘healthy’ balance sheets again.”
Burniske also says that he’s bullish on blockchain and crypto regardless of the macroeconomic landscape.
“I’m as long crypto as I’ve ever been – blockchains are critical infrastructure that provide solutions to the problems our society faces, including AI. As a species, we eventually find our way, though the walk is full of sticks an stones. If you look up, there are blue skies.”
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