The host of the popular crypto outlet Coin Bureau thinks the U.S. Federal Reserve’s plan to raise interest rates will have “profound implications” for the country’s economy and every asset class, including crypto and Bitcoin (BTC).
Federal Reserve officials have recently indicated they plan to scale back asset purchases and raise interest rates next year in an effort to fight inflation.
In a new video, pseudonymous trader Guy tells his 1.8 million YouTube subscribers that BTC has behaved a lot more like a “risk-on asset” in the past two years.
“In other words, portfolio managers and investors view it more as an asset class to generate strong returns and not one to act as a safe haven.”
The analyst also says there’s a “strong possibility” Bitcoin follows suit if stocks fall in the wake of the Fed raising interest rates.
“As we’ve seen over this year, when there were fears about potential tapering, the price of Bitcoin fell.
Hence if the Fed was to carry on with its plans to increase rates and rein in that monetary stimulus, then Bitcoin is likely to fall with all other risky assets.”
Guy, however, still thinks Bitcoin is the best long-term inflation hedge, as long as investors are prepared to deal with the violent price movements that will likely occur after the rate hikes.
“As we roll into the new year with persistent and stubborn inflation, investors are going to be looking for a lifeboat.
That’s why I think that Bitcoin is still the best bet against it.
If one can handle the short-term volatility that’s likely to come from the rate hikes, it’s perhaps the best bet to protect long-term purchasing power.”
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