Andrew Parlin, founder and chief investment officer of Washington Peak Investment Advisors in New Jersey, thinks the price of Bitcoin will rise further, due to the Federal Reserve’s president’s desire to keep inflation at 2%.
This will benefit BTC as Powell promises to keep interest rates close to zero and continue to receive $ 1.4 trillion of government and corporate debt annually by 2024.
Future inflation threat
The investment adviser described Powell’s expanded pigeon appearance as a purely asymmetrical money experiment. According to him, the Fed’s loose policy may cause incalculable losses through “established inflation” that the US has not seen for decades.
“Given how inflated asset prices are, the ensuing decline is likely to be unusually severe and prolonged,” Parlin says.
The finance expert also noted that Powell’s disregard for inflation risks was due to falling consumer prices since the 2008 crash.
He found that the fractal was irrelevant when placed in post-pandemic conditions, especially when looking at the stimulus packages that had been raised in the previous 12 months, which were nearly five times the amount of financial spending by the US government indicating the recession of 2008-2009.
“Common sense risks a strong increase in inflation, well above the Fed’s forecast of 2.4 percent for 2021,” Parlin said.
What it means for bitcoin
Investors flocked to cryptocurrency as they believed it would be an insurance asset against rising consumer price indices. The narrative was simple: Bitcoin has a supply cap of 21 million tokens, while the US dollar, a global store of value, comes in an infinite supply. A gold-like scarcity makes Bitcoin an alternative measure for parking value.
The cryptocurrency has risen three times in 2021 and set a new record of over $ 61,000 in mid-March. Again, the growth of Bitcoin accelerated after companies like Tesla, MicroStrategy and Square added billions of dollars’ worth of BTC to their balance sheets.
Tesla also began accepting Bitcoin as payment for its electric vehicles, legitimizing the cryptocurrency as a futuristic store of value assets.
As Parlin warned, the inflation alert has already begun. The Financial Times reported on Sunday that many US companies warned of rising business costs, and the first types of inflation manifested themselves.