Bitcoin’s recent performance has sparked a heated debate among economists and investors. Economist Robin Brooks from the Institute of International Finance (IFF) tweeted that Bitcoin’s diversification attributes are being displayed to the downside.
Although a dovish Fed sent the 2-year Treasury yield down in anticipation of looser monetary policy, Bitcoin’s value fell instead of rallying. It has led to many investors feeling like they are losing no matter what side of the coin they are on.
In response to Brooks’ tweet, Saifedean Ammous, author of the bestselling book “The Bitcoin Standard,” challenged Brooks to show how his investment portfolio has outperformed BTC over the past five years rather than focusing on short-term periods.
Ammous argues that high-time preference is a flawed approach to investing and that holding Bitcoin over the long term has proven to be a winning strategy.
The debate drew in the community, with one member pointing out that bankers prefer a low time frame preference because the game is rigged, while Bitcoiners are different.
Others noted that Bitcoiners who have been dollar-cost averaging for more than a couple of days had seen significant gains and that holding for the long term is the key to success.
However, the debate highlights the current uncertainty surrounding BTC and other cryptocurrencies. As investors navigate these uncharted waters, which strategies will prove successful in the long run remains to be seen.
Wharton Professor Warns Of Bitcoin Rally
In another latest update, BTC’s recent surge toward $29,000 has raised concerns among experts. Wharton professor Jeremy Siegel has warned that the rally may not last long, especially as the Federal Reserve prepares to meet on Wednesday.
Siegel predicts a 25 basis point rate hike, which could be accompanied by a hint in the press conference to pause at the next meeting. However, the Fed is expected to monitor the banking crisis closely and may tone down its hawkishness.
While some experts suggest that the Fed may pause now due to banking stress, others believe that tighter financial conditions could translate to a 1.5% increase in the Fed Funds Rate. Regardless, consumers may not need to worry about a slight fee increase for higher insurance limits.
On the topic of a potential recession, strong claims data and housing starts suggest a favorable outlook. Additionally, the recent banking crisis may lead to a natural downshift in tight policies and an optimistic outlook for 2024.
Meanwhile, Bitcoin’s narrative of being a safe alternative to the banking system has helped drive a 30% gain in the last week. However, Siegel believes Bitcoin’s rally may fizzle out as people regain trust in banks.
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