Is Bitcoin Growing Up?
The blockchain-focused investment firm Pantera Capital Management LP’s CEO Dan Morehead said on Thursday why current fiscal and monetary policy in the U.S. is very likely to inflate the Bitcoin price. His opinions on this were reported in the March 2020 issue of Blockchain Limited Letter, the Pantera Capital newsletter. Morehead examined the potential economic impact of COVID-19.
US GDP will suffer
He assumes that US GDP will suffer a seasonally adjusted 4 percent decline in annual interest rates under the less bad scenario in the second quarter. The President of the US Federal Reserve, however, is much more pessimistic about the economic impact.He told Bloomberg in a phone interview on March 22 that he believes the US unemployment rate could reach 30 percent in the second quarter due to the shutdown of the coronavirus, with an unprecedented 50 percent drop in gross domestic product. Morehead believes that the virus is a physical restriction of economic activity and that it will be very difficult to counter with the usual economic policy tools.
Potential impact on the crypto market
It is clear to Morehead that the huge amount of money printed by central banks around the world will lead to inflation.
“If governments increase the amount of paper money, more paper money will be needed to buy things that have fixed amounts, such as stocks and real estate, that they would settle on if the money supply were not increased …”, he said.