Due to the ongoing depreciation of fiat and the prolonged banking crisis, the cryptocurrency will outperform other asset classes. This was stated by the former top manager of Goldman Sachs and macro investor Raul Pal.
MOAR COWBELL AS ANOTHER ONE BITES THE DUST…
Well, it looks like $FRC will bite the dust this weekend, either ending up in the hands of the FDIC or a major bank (with FDIC/Fed support).
In an over leveraged world, where GDP isn’t growing fast enough to pay the interest on the…
— Raoul Pal (@RaoulGMI) April 29, 2023
The expert expressed this opinion against the backdrop of the situation with the Californian First Republic Bank (FRB). The institution’s problems began with the collapse of Silicon Valley Bank, and after the publication of the report for the first quarter, the fall of its shares accelerated. According to the documents, deposits in January-March decreased from $176.4 billion to $104.5 billion.
In an April 29 tweet, Pal allowed three scenarios: either the FRB will collapse or it will be under control. FDIC or another large bank.
May 1 Regulator announced on the closure of First Republic Bank. He passed under the external management of the corporation. Deposits and other assets will be bought by JPMorgan Chase Bank.
At the time of writing, First Republic Bank shares are trading at $3.51, down 74.75% for the week.
According to Pal, against the background of the impending collapse Fed will start a new round of printing dollars to pay off the country’s external debt.
“In an over-leveraged world where GDP is not growing fast enough to pay interest on government and private sector debt, interest payments are transferred to the Fed’s balance sheet and magically never come back,” the macro investor explained.
However, in his opinion, tech stocks and “high-quality cryptocurrencies” are the only assets that will be able to survive the projected depreciation of the currency.
“Digital assets have the highest beta on the balance sheets of the world’s central banks. Not real estate, not gold, not SPX, not bonds, not emerging market stocks. All of them depend on the balance sheets of the Central Bank or worse, ”Pal said.
He also noted that Bitcoin is “literally invented for such cases”, while Ethereum provides additional tools to increase profitability.
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