US billionaire investor Stanley Druckenmiller warned that the US economy would go into recession next year and said he would rather “own more bitcoin (BTC) than gold” amid rising inflation.
Druckenmiller, founder of hedge fund Duquesne Capital, also said that “we have been in a bear market for six months … it is highly likely that the bear market has a way to go” and that the stock market rout is not over yet. .
Speaking at the 2022 virtual Sohn Investment Conference last Thursday, Druckenmiller said most indicators pointed to a south-facing economy.
“Inflation has never gone down without a recession and I think a recession is in the cards,” said the billionaire, in a interview with Stripe co-founder John Collison.
Last week, the U.S. Department of Labor reported that the annual inflation rate rose to 8.6% in May, the highest level since 1981.
“Given the size of the asset bubble and the destruction of the markets; given what is happening in Ukraine, given the zero Covid policy in China … I strongly assume that we will have a recession in 2023, “Druckenmiller predicted.
Druckenmiller prefers BTC to gold in the inflation bull market
The 68-year-old investor, who along with fellow billionaire George Soros, is credited with pioneering an investment strategy known as “macro trading,” was asked whether the cryptocurrency industry had begun to influence other asset classes. asset.
“I don’t know if I’m seeing it, but I expect it to,” he explained. “You can’t accumulate over $ 2 trillion worth of wealth in purchasing power and then take $ 1 trillion and it doesn’t matter. There certainly seems to be a strong correlation between cryptocurrencies and the Nasdaq, so I look at it as an indicator in this way. “
Going on, Druckenmiller, who boasts an estimated net worth of $ 10 billion, said:
“I would be very surprised if blockchain wasn’t a real force in our economy, let’s say between 5 and 10 years. I find encryption interesting and am monitoring it. If we’re going to have an inflationary bull market, I’d like to own more bitcoin than gold, but if it’s in a bearish phase for other assets, you want to own gold. “
Druckenmiller’s comments are closely followed in the wake of similar sentiments by fellow hedge fund billionaire Ray Dalio, who reiterated that “cash is junk” and stocks “junk”.
Bridgewater Associates founder said he preferred “digital gold like bitcoin” instead.
Bitcoin as digital gold
Bitcoin has made comparisons to gold, and the leading crypto asset is now accepted in some circles as the digital equivalent of gold.
In 2020, many people believed bitcoin was poised to move from a risky speculative asset to the metal version of the cryptocurrency market after its correlation with gold jumped to all-time highs.
Indeed, that argument may have started to crumble with the massive decline in cryptocurrency markets this year. Reports of Bloomberg revealed that BTC’s correlation with gold dropped to near zero in early January, and as bitcoin prices declined in the following months, gold continued to rise.
In April, the 50-day correlation coefficient for BTC and gold was about minus 0.4, the lowest since 2018, Bloomberg said. A reading of 1 implies that resources move hand in hand, while minus 1 is the other way around.
The cryptocurrency markets, on the other hand, have become more tied to the stock market, particularly blue-chip tech stocks like Apple, Amazon and Microsoft. Over $ 1.6 trillion has been wiped out of the cryptocurrency markets so far this year.
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