Anthony Scaramucci (The “mooch””), who served in the Trump administration for a brief period as communications director, is currently a hedge fund manager on Wall Street. He is bullish on Bitcoin. And, recently, he has given several statements about it. We must take into account that his firm SkyBridge Capital has been reduced by half due to a mass exodus of his clientele following the bearish cycle of the last few months. Apparently investors don’t like losing money. However, Anthony has no choice but to look to the future. What has he said about Bitcoin?
Scaramucci is bullish in the long term due to institutional interest. He has used the term demand shock. Which tells us that we are dealing with a professional Wall Street investor and not merely a libertarian social media activist who insists on talking about a supply shock. Bitcoin price will rise thanks to institutional demand. Or rather, the price of Bitcoin will go up, if there is institutional demand. the mooch mentions two great victories in this regard. On the one hand, we have the 401k from Fidelity. And, on the other hand, we have the arrival of BlackRock. These are very important developments, ladies and gentlemen.
This view is in stark contrast to the vibe of Bitcoin maximalists on Twitter. I am referring to the “monetary insurrection” of the Bitcoin standard, the libertarian utopia, the war between them and us and self-custody with the Holy Grail. The vision of the “people against the establishment” is quite popular on the networks. However, the vision “Wall Street invests in Bitcoin” is much more practical and profitable. I dare say that financial interest will prevail over politics. In other words, the price of Bitcoin will eventually be more important than the idiosyncrasies.
scaramucci does a forecast of 300 thousand dollars per unit in 6 years. That, undoubtedly, is a possibility. Obviously this is an approximate number. And it could be assumed that the model used is the behavior of the price of Bitcoin in the past with certain adjustments due to the law of diminishing returns and due to an anticipated economic slowdown. You could say that this is the default figure. Which is not an entirely insane reference. We are talking about achieving 4X the all-time high in 6 years. Or 15X the current price in 6 years. Considering that the current price is almost 1X of the 2017 all-time high and the current high of $69K is only 3.4X of $20K, 15X is still an optimistic target.
Is Bitcoin a hedge against inflation? Dogmatists answer this question automatically as if reading from a script. The answer is said from the heart. Because it is a matter of political identity in the midst of a war of ideas. What does Anthony Scaramucci say about it? Friend Anthony works on Wall Street. He has no choice but to be objective. Because your customers are not stupid. Of course Bitcoin is not a good hedge for inflation. “Bitcoin is not mature enough yet to be an inflation hedge,” Scaramucci said.
This, of course, is not the end of the world. Of course we cannot underestimate the power of denial. Dogmas are articles of faith. Virtually every asset rises with inflation in the long run. Coffee, rice, paper, water, oil, real estate, etc… In fact, it is extremely difficult to find something that does not increase in price in the long term. In this sense, every asset is a hedge against inflation. So, if we say that Bitcoin is a hedge against inflation, but in the long term. Actually, we’re making a fool of ourselves. Because the phrase is applied to manage the risk of a portfolio during a period of high inflation. I mean, all assets tend to be good long-term hedges. Therefore, the phrase is used only for assets that protect us from inflation in times of high inflation.
Suppose that the estimated inflation for the next year is 10%. This implies that we must add assets, in our portfolio, with estimated yields higher than 10% for the next year. That would be a real cover (hegde). Something that covers us from the risk of that inflationary year. So, the investor is forced to look for assets that prosper in periods of high inflation. Investing in an asset that falls in price with high inflation, but had a very good run in the past during a period of low inflation would not make much sense. In this case, Coca-Cola is a better hedge than Tesla, for example.
During a period of moderate inflation, inflation is not a problem. In other words, the goal is not to grow 2% a year. During those periods, the goal is not to beat inflation. The goal is to outperform the S&P 500. Investors want to grow 10%, 15%, 20% or more. Here the risk assets are the crown jewels. Bitcoin is great. He is a star asset. Excellent long term investment. But it is a risky asset. It is not necessarily a hedge against inflation. “Risk asset” is not a bad phrase. Here risk means opportunity.
Wall Street is very clear on Bitcoin. This downward cycle will pass and the institutions are not going to miss the opportunity. All this mess and confusion around words and terms comes from ideology. Bitcoin is not only a digital asset and an emerging market. It is also a digital tribe with its own culture and its own narratives. The configuration of the tribe is, in fact, quite diverse. However, libertarians, anarcho-capitalists and hard-line conservatives are the loudest camp in the field of discourse. They have proclaimed themselves as the official voices of Bitcoin implying the balance more towards the political than towards the financial.
Of course, there is also a silent majority whose goals are more financial than political. Militants dominate on Twitter. But investors dominate in price action. Users are the true owners of Bitcoin. And the new capitals are what will drive the price of Bitcoin in the future. The world is diverse. So Bitcoin, as it grows more, will be more and more diverse. Wall Street is slowly arriving. These are hard times. But this will not be forever. There are many reasons to see the future with optimism.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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