Bitcoin to Skyrocket? Strike CEO Jack Mallers Predicts Inflation Surge After Fed’s $300B Bank Bailout

Is Bitcoin on the verge of a massive price surge? That’s the bold prediction from Jack Mallers, CEO of Strike, a Bitcoin-focused payments company. Mallers points to the Federal Reserve‘s recent $300 billion lifeline to the banking industry as the catalyst, arguing that it signals a new era of sustained high inflation – an environment where Bitcoin thrives. But is he right? Let’s dive into Mallers’ thesis and explore why he believes Bitcoin is primed for a bull run amidst financial uncertainty.

Why Does Mallers Think Bitcoin Will Surge? The Inflation Argument

Mallers’ argument, as he explained in a recent CNBC interview with Kelly Evans, boils down to a fundamental difference between Bitcoin and the US dollar. It’s a matter of supply and scarcity.

• Bitcoin’s Fixed Supply: Bitcoin has a capped supply of 21 million coins. No more can ever be created. This scarcity is a core tenet of its value proposition.
• Dollar’s Expanding Supply: Unlike Bitcoin, the US dollar’s supply is not fixed. Central banks like the Federal Reserve can increase the money supply, as they’ve recently done with the $300 billion injection.

Mallers’ logic is straightforward: when the supply of dollars increases while Bitcoin’s supply remains constant, the value of each dollar potentially decreases relative to Bitcoin. In simpler terms, more dollars chasing the same amount of Bitcoin could drive Bitcoin’s price up.

“The money printer is brr,” Mallers quipped, encapsulating the essence of his argument. He contends that saving in dollars is becoming increasingly risky due to this inflationary pressure. He believes people will seek refuge in scarce assets like Bitcoin.

Addressing the Deflationary Question: Is This Time Different?

Kelly Evans, in the CNBC interview, raised a crucial point: financial crises have historically been deflationary. Why should we expect Bitcoin to skyrocket now? This is where the nuances of the current economic situation come into play.

Mallers, echoing sentiments from figures like former Coinbase CTO Balaji Srinivasan (who famously predicted Bitcoin hitting $1 million in 90 days), argues that this time *is* different. The massive money printing in response to the banking crisis, coupled with already high inflation, creates a unique scenario.

Here’s a breakdown of the situation:

• Inflation Remains High: Despite efforts to curb it, inflation is still significantly above the Federal Reserve’s 2% target, currently hovering around 6%.
• Bank Bailouts & Money Printing: The $300 billion Bank Term Financing Program, designed to stabilize banks after the Silicon Valley Bank (SVB) collapse, effectively reverses much of the Fed’s previous efforts to reduce its balance sheet and combat inflation.
• Shifted Market Expectations: Markets are now anticipating the Fed to start cutting interest rates as early as June 2023, a significant shift from earlier expectations of rate cuts beginning in Q1 2024. This indicates a perceived need to stimulate the economy, potentially exacerbating inflationary pressures.

Mallers believes that the Fed is trapped. To prevent further financial instability, they will be forced to inject more money into the system, even at the risk of fueling inflation. He foresees inflation in the 5-10% range becoming the new normal.

“Scarce Assets, Risky Assets, Be Major Winners”: Beyond Bitcoin

Mallers’ perspective isn’t solely about Bitcoin. He sees a broader trend favoring “scarce assets” and even “risky assets” in this environment of monetary expansion. This aligns with views from other prominent figures in the crypto space.

Arthur Hayes, co-founder of BitMEX, echoed similar predictions in a recent blog post, arguing that the Fed’s new program will lead to “unlimited money printing.” Hayes and Mallers both suggest that assets with limited supply, like Bitcoin, could benefit significantly from this monetary policy shift.

On-Chain Signals: Is Bitcoin Already in a Bull Market?

Adding further weight to the bullish narrative, on-chain analytics firm Glassnode has identified compelling data suggesting Bitcoin might already be entering an early bull market phase.

Consider these on-chain metrics:

• Surge in New Bitcoin Entities: Over 122,000 new Bitcoin entities (likely representing new users or organizations) were established per day recently. This level of activity surpasses 90% of all days in Bitcoin’s history.
• Strong Transaction Volume: Daily Bitcoin transactions are averaging around 309,500, indicating robust and growing investor interest.
• Long-Term Holders Holding Strong: Glassnode notes that long-term Bitcoin investors are not taking profits during this rally. This “exceptional strength” suggests a strong belief in Bitcoin’s long-term potential and its role in the future financial system.

Conclusion: Bitcoin as an Inflation Hedge in a Changing Financial Landscape?

Jack Mallers’ prediction of a Bitcoin surge is rooted in the argument that the Federal Reserve’s actions are setting the stage for sustained high inflation. He, along with other analysts, believes that Bitcoin’s fixed supply makes it an attractive hedge against the potentially devaluing dollar.

While the future is uncertain and predictions should always be viewed with caution, the confluence of factors – rising inflation, expansionary monetary policy, and positive on-chain indicators – paints an interesting picture for Bitcoin. Whether Mallers’ bullish outlook fully materializes remains to be seen, but the narrative of Bitcoin as a potential inflation hedge is certainly gaining traction in the current financial climate. Keep a close eye on how these dynamics unfold in the coming months – it could be a pivotal time for Bitcoin and the broader cryptocurrency market.