For the most part, investors abiding by traditional investment strategies have avoided Bitcoin like the plague.
Legendary investor Warren Buffett, for instance, called the cryptocurrency “rat poison squared”, later explaining that there isn’t much inherent value in the project.
But, there is a rapidly-growing narrative that the need for Bitcoin is growing as the current tumultuous macroeconomic and geopolitical climate is perfect for the industry’s growth. And the chief executive of Circle, Jeremy Allaire, perpetuated said narrative on CNBC on Monday.
Bitcoin’s Rally Has Been Supported by Macroeconomic Trends
Bitcoin has been on an absolute tear over the past week. According to analytics site Coin360, the asset is up around 22% in the past seven days. As of the time of writing this article, the flagship cryptocurrency sits snug at $11,700 — down $2,300 from the year-to-date top, but $2,600 up from the monthly bottom.
According to Allaire, who appeared on CNBC’s now seemingly crypto-centric “Squawk Box” segment, this rally has much to do with what is going on in terms of turmoil on the geopolitical stage. He stated:
“You can very clearly see some macro correlation there. I think the broader theme of, you know, Bitcoin specifically, crypto more broadly participating in these global macro forces is becoming more and more clear.”
Indeed, Bitcoin began its latest rally around two days ago in direct correlation with a tweet that Donald Trump published in regards to fresh tariffs, which also coincided with a drop in the value of the Chinese Yuan against the U.S. Dollar.
This is the seeming second time that tariff-related messages from the Trump administration have resulted in a drop in the CNY/USD and a rally in BTC.
This move supports the hearsay that Chinese investors who have managed to skirt regulations are buying Bitcoin to get money out of an increasingly threatened economy.
Trade wars aren’t the end of the story. Allaire continued:
“Rising nationalism, rising amounts of currency conflict, trade wars, these all obviously are supportive of a non-sovereign, highly secure digital store of value… It’s uncensorable, unseizable, these are really powerful attributes that for people who are looking at risk assets or looking at fundamental turmoil, it can be a very attractive asset in that context.”
He isn’t the first to have thought this. Tyler Cowen, a Bloomberg economist-columnist that formerly was a clear skeptic of Bitcoin, recently admitted that the cryptocurrency likely has a big future.
One of the four reasons he mentioned in his op-ed was the fact that rising levels of populism around the world will likely force prudent investors to look for safe havens/hedges suitable for our day and age — this being an alternative, uncorrelated asset like Bitcoin.
All this corroborates the theories that Bitcoin is the successor to gold. As Chamath Palihapitiya, a former executive of Facebook and venture capitalist, told CNBC viewers a few weeks back:
“Bitcoin is the perfect hedge against the traditional financial infrastructure”. He elaborated that if fiscal or monetary policy is wonky, as it arguably is now, having Bitcoin is like “the schmuck insurance you have under your mattress”.
Chinese Government is Softening Their Crypto Blows
Allaire concluded his segment by discussing his opinion that the Chinese government is softening their blows against the industry.
To back this point, the chief executive suggested that the rulings of certain Chinese courts, like the Hangzhou Internet Court’s admission that Bitcoin is “digital property”, and certain statements of support from large technologists and entire commercial banks is a sign that Bitcoin is becoming an accepted industry in China once again.