In a recent development, chief economist Robin Brooks, holding the position of chief economist at the Institute of International Finance (IIF), has recently stirred controversy by dubbing Bitcoin (BTC) a “pointless asset.” Brooks contends that the cryptocurrency’s market fluctuations are not inherently tied to its value but are influenced by the policies dictated by the Federal Reserve.
Bitcoin recently surged to a remarkable $38,437, representing its highest point since May 2022. This notable increase was largely attributed to the resolution of the prolonged legal issues surrounding Binance and the growing anticipation surrounding the forthcoming introduction of “spot bitcoin” exchange-traded funds (ETFs). These developments have been met with great interest and have sparked discussion among investors and financial experts alike.
However, Brooks’s bold assertion challenges the prevailing notion of Bitcoin’s autonomy as a decentralized asset. He suggests that Bitcoin essentially functions as “just another futures contract on the Fed,” insinuating that its valuation and behavior are primarily shaped by the Federal Reserve’s monetary policies rather than its inherent worth.
Bitcoin’s Value Tied to Federal Reserve Policies
Brooks suggests investors should consider engaging directly with futures contracts linked to the Federal Reserve’s actions(Fed). The argument he puts forward is that Bitcoin’s price movements are largely reflective of broader economic policies, and it lacks intrinsic value as an independent asset. Bitcoin may have some potential as a speculative asset but may not be suitable for those seeking a more stable value.
Consistently conveying this perspective through his social media channels, Brooks highlights the close correlation between the BTC price trajectory and the Federal Reserve’s interest rate policies. Notably, the cryptocurrency tends to decline during a hawkish stance by the Fed and surge with a dovish outlook.
Furthermore, Brooks dismisses the traditional views of Bitcoin as a dependable store of value or a tool for diversification. He has previously characterized it as a “bubble asset,” susceptible to abrupt fluctuations triggered by shifts in monetary policy.
Brooks’s categorical denunciation of BTC apparent detachment from Federal Reserve influence has ignited intense debates within financial circles. His stance has divided opinions, prompting discussions among experts and investors regarding the cryptocurrency’s true nature and intrinsic value in light of external regulatory forces.