According to Jack Mallers, the CEO of Strike, the financial system is being disrupted by the Federal Reserve. He anticipates that Bitcoin will see a surge in value following the Fed’s recent $300 billion injection into the banking sector. Mallers also predicts that the US dollar is on the verge of a period of consistently high inflation, which he believes will be advantageous for Bitcoin.
Can We Expect An Increase in Inflation?
During an interview with CNBC, CEO Jack Mallers was asked why he believes Bitcoin will experience a sharp increase in value during a banking crisis, which has historically resulted in deflation. Co-anchor Kelly Evans cited Balaji Srinivasan, former CTO of Coinbase, who recently predicted that the dollar would hyperinflate and Bitcoin would reach $1 million within 90 days. Mallers’ argument was straightforward: Bitcoin is a limited supply currency, while the US dollar is not, so as more dollars enter circulation, Bitcoin’s value will rise. Mallers stated, “The only thing that is clear to us and our clients is that you cannot hold and save dollars anymore.”
The Federal Reserve implemented a new Bank Term Funding Program, which involved providing $300 billion to back up banks and erased half of the progress made in reducing its balance sheet over the previous year. The Fed has been working to bring persistently high inflation down to its target rate of 2%, which reached a peak of 9.1% in June. Although inflation remains high at 6%, the market has already shortened the timeframe for when the Fed is expected to begin cutting rates, from Q1 2024 to June 2023. According to Mallers, inflation in the 5-10% range will now be considered normal.
Mallers continued, stating that the Fed will have to back up struggling banks with new money, resulting in a scarcity of assets and a surge in risk-on assets. BitMEX co-founder Arthur Hayes also made similar predictions in a blog post, stating that the Fed’s new program would usher in “infinite money printing.”
Entering a Bull Market Phase
Additional to the observations by Hayes and Mallers, Glassnode, an on-chain analytics company, has identified significant indicators that suggest Bitcoin has entered an early bull market phase. For instance, last week over 122,000 new Bitcoin entities were established every day, which is higher than 90% of Bitcoin’s historical daily figures. Moreover, the total number of transactions surged to 309,500 per day, indicating a surge in investor engagement.
Glassnode has noted that few long-term investors seem to be interested in selling during this rally, indicating a notable level of strength and a reflection of the conviction surrounding Bitcoin’s significant role in the future of the global financial system.
