Peter Thiel, PayPal co-founder, believes the high Bitcoin price is an indication of an ongoing crisis in the economy. Thiel expressed his concern that Bitcoin hitting over $60,000 means inflation has already started taking a toll on the economy. Which is why he believes it’s not the best time to buy BTC.
As reported by Bloomberg, Peter was speaking at a “Conservative conference” where he confirmed his belief on the impact of rising inflation on Bitcoin price. He even regretted “not buying more” of the token in the earlier days.
The main cause of current high inflation can be traced back to the coronavirus pandemic. Following the impact of the pandemic on the economy, most governments went on aggressive and even controversial recovery plans to mitigate these impacts. The Federal Reserve was accused of recklessly printing more money without actionable measures that would stop inflation.
Several financial experts, Peter Thiel included, have criticised the central bank for such actions. According to Thiel, the Fed is in a state of “epistemic closure.” Meaning, they are closing their minds to rapidly developing problems. He believes the Fed has ignored all warnings as pointed out by many in the financial sector as it continues to print money regardless of the effects on the economy.
This is not the first time Peter Thiel is criticising the central bank and its role in increasing Bitcoin value. When the token earlier surpassed its all-time high in October, the billionaire was of the same view. While he claimed Bitcoin could keep going up past the $66,000, it meant a complete bankruptcy moment for the central banks.
The rise of Bitcoin as a hedge against inflation
Even though Peter Thiel and other financial experts are warning about Bitcoin’s rising price and that it’s not ideal for purchase, various traders view it as the best alternative to gold as a store of value. Gold for the longest time has been used as the hedge against inflation. However, following the rising Bitcoin value while traditional economy struggles have seen most investors replace gold with Bitcoin.
Investors are forced to look for alternative unconventional investment options to manage rising inflation. So far, Bitcoin and other digital currencies seem to be the best option.
So far, various financial experts are vouching for Bitcoin to operate as a hedge against inflation. One of the popular Bitcoin proponents is the billionaire hedge fund manager, Paul Tudor Jones III. He believes Bitcoin is a better version of the precious metals and has since allocated 5% of his portfolio to cryptocurrencies.
Billionaire Barry Sternlitch, Starwood Capital Chairman, is another Bitcoin advocate. He believes Bitcoin is a financial tool that can be used against mass printing of fiat currencies. He has since invested in digital currencies.
The trend has also been similar with institutional investors. Most of them were never willing to embrace cryptocurrencies. However, after sustained increased inflation rates, they are adopting Bitcoin and other crypto assets as an alternative investment option.
Given the central bank and the Fed is yet to provide any mitigation plans against the rising inflations, Bitcoin is likely to keep rising in value.