The recent actions of the US president shutting down his government because he didn’t get his way would make anybody question its responsibility. The economic damage has yet to be accounted for but it will not be a small figure. Escalating household debt and inflation also add to those woes so looking towards a safe haven could be the way forward.
Speaking at the Cayman Alternative Investment Summit in Grand Cayman this week, CIO of crypto hedge fund Ikigai Asset Management, Travis Kling, referring to Bitcoin said;
“There is a really good chance we have something better than gold. It’s like a CDS against fiscal and monetary policy irresponsibility,”
A CDS or credit default swap is like an insurance policy that pays out when a borrower defaults on debt. According to CNN these forms of insurance became infamous during the 2008 financial crisis when one of the major issuers of them, AIG, almost collapsed.
Massive debt accumulation by central banks has set alarm bells ringing for many fintech experts and investors who ultimately fear a repeat of 2008. There is an additional fear that high budget deficits and low interest rates will eventually lead to hyper-inflation which will erode the value of the US dollar even further.
This would be the script for mass adoption of a decentralized currency according to Kling who is not alone with his bullish stance on crypto. Morgan Creek Capital Management is one of a number of large financial institutions launching crypto based products, with their own one focused on crypto infrastructure.
“We believe bitcoin will be one of, if not the, largest network on the planet. We are in the middle of the greatest wealth opportunity … It’s beyond any of our imaginations,” Morgan Creek founder and CEO Mark Yusko added.
Crypto day trading has been cautioned against however and the big players are looking at long term investments only. Venture capital firm Andreessen Horowitz is still looking at the crypto space for investments in the infrastructure of cryptocurrencies. In 2012 the company backed Coinbase which has since become one of the largest exchanges on the planet with an estimated value of $8 billion.
Managing partner, Scott Kupor, said that cryptocurrencies are still embryonic and have a lot of evolution to come. This will create investment opportunities just as the early internet did. “We are in the seed investment stage. The first iterations look silly. They never work … The investment opportunities are the ones that solve the problems,” He added.