Scaramucci: bitcoin is not a weapon against inflation

Last Updated: 23 August 2022

Bitcoin is not yet a weapon against the skyrocketing inflation of the dollar or the euro. First, there must be at least 1 billion bitcoin wallets worldwide for bitcoin to have that function.

Inflation weapon

Anthony Scaramucci, CEO of Skybridge Capital told CNBC news channel. Bitcoin can act as a means of maintaining purchasing power, but it is simply too early to talk about it. Bitcoin currently has a market value of ~$400 billion, while gold is about 25 times that as an asset class.

Scaramucci describes bitcoin as a ‘technological asset for early adopters.’ Only when bitcoin reaches the masses can it begin to make a difference on the world stage. The former communications strategist to former President Donald Trump said:

‘Only when there are 1 billion or more bitcoin wallets in circulation can you talk about a weapon against inflation.’ The current number of bitcoin wallets is estimated at around 200 million. A precise numbers are simply not available. There are many more bitcoin addresses, but someone usually uses more addresses for financial privacy reasons as well.

One of the core principles of bitcoin is that it is a digital scarce resource. It is ingrained in the code that a maximum of 21 million will be mined. A significant proportion of these are and will not be on the public market because the coins are being held. Proponents of bitcoin point to this scarcity as helping to prevent loss of purchasing power in the long term.

However, the time when bitcoin could sail its own course will no longer be true in 2022. Also, because more and more traditional parties have exposure to the currency, it is increasingly following the traditional markets. For example, the International Monetary Fund recently noted a strong correlation between bitcoin and Asian equities.

Currently, Bitcoin is trading around $21,000, 69% below its all-time high of November 2021.

BlackRock

Scaramucci is still optimistic about bitcoin and the market as a whole. He points to the new bitcoin trust fund from BlackRock, one of the largest asset managers in the world. He sees their partnership with Coinbase as an essential stepping stone to bitcoin.

Analysts disagree on whether bitcoin will embark on another autumn rally. Meltem Demirors, Chief Strategy Officer of Coinshares, expects “flat prices” in the third quarter, due to the ongoing correlation with technology stocks. Their price-performance depends on Federal Reserve policy. Currently, this policy is quantitative tightening which leads to less liquidity in the markets.

Author

  • Ivan came across the topic of cryptocurrencies in early 2016 and, as an author and enthusiast, has been intensively involved with the topics of cryptocurrencies, blockchain and STOs ever since.

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