With the Federal Reserve‘s $300 billion injection into the banking industry last week, Strike CEO Jack Mallers believes Bitcoin is prepared for a surge. According to Mallers, the US currency is entering a new phase of chronically high inflation, which will only benefit Bitcoin.
In an interview with CNBC, co-anchor Kelly Evans asked the CEO why consumers could anticipate Bitcoin to skyrocket during a financial crisis, which has historically been a deflationary time. She referenced former Coinbase CTO Balaji Srinivasan, who predicted last week that the dollar will hyperinflate, causing Bitcoin to reach $1 million in the next 90 days.
Mallers’ thesis was straightforward: Bitcoin is a money with a fixed quantity, whereas the dollar is not, hence Bitcoin will appreciate against the dollar as more of the latter enters circulation.
“The money printer is brr,” he said. “The only thing that is evident to us, and to our consumers, is that you can no longer hold and save in dollars.”
This week, the Federal Reserve backed banks with $300 billion as part of its new Bank Term Financing Program, wiping over half of the progress made in lowering its balance sheet over the previous year. The central bank has been seeking to bring consistently high inflation, which peaked at 9.1% in June, back down to its target rate of 2%.
Though inflation remains high at 6%, markets have already shifted their expectations for the Fed to begin cutting rates from Q1 2024 to June 2023. According to Mallers, inflation in the 5-10% range will henceforth be considered typical.
“They have to backstop these things with new money,” he continued, referring to institutions struggling in the aftermath of the collapse of Silicon Valley Bank (SVB). “You’re seeing scarce assets, risky assets, be major winners here.”
Last Thursday, BitMEX co-founder Arthur Hayes released a blog post with identical predictions, claiming that the Fed’s new scheme will usher in “unlimited money printing.”
In addition to Hayes and Mallers, the on-chain analytics business Glassnode has identified major on-chain indications indicating that Bitcoin has returned to early-bull market territory.
This week, over 122,000 new Bitcoin organizations were established per day, which is more than 90% of all days in Bitcoin history. Nonetheless, transactions were 309,500 each day, indicating that investor interest is expanding.
“Few longer-term investors appear to be motivated to take profits into this rally, suggesting exceptional strength and reflecting ideas about Bitcoin’s vital position in the future of the global financial system,” Glassnode noted.
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