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The Fed’s money printing is supporting Bitcoin’s growth

Photo of: Joseph Stone
by Joseph Stone

The massive issuance of dollars over the past year has made Bitcoin’s day, says an executive at Soros Fund Management. Without it, the cryptocurrency would probably have remained a marginal asset.

Sometimes crises are good. And the price of Bitcoin would be a perfect illustration. To support the economy, states are multiplying massive stimulus plans. This is particularly the case in the United States. And this translates into a considerable issuance of dollars.

The “money supply in US dollars has increased by 25% in the last year alone,” says Dawn Fitzpatrick, the chief information officer of a significant fund, Soros Fund Management.

This monetary policy is now allowing cryptocurrencies, including Bitcoin, to reach an “inflection point”. These crypto-assets are directly benefiting from the inflation of fiat currencies, foremost among them the dollar.

“I think as far as crypto in general is concerned, we’re at a really significant point,” the expert tells Bloomberg. The explosion of the money supply in the US has allowed Bitcoin to emerge from the category of marginal assets, he judges.

This situation justifies Soros Fund to invest in crypto infrastructure and some of its companies. Very recently, Soros Fund Management entered the capital of NYDIG ($ 200 million), but also of Lukka ($ 53 million).

For all that, and like Jerome Powell of the Fed, Dawn Fitzpatrick does not consider crypto as a threat to fiat currencies. Why not? Because cryptocurrencies are not even about money.

Are CBDCs a threat to Bitcoin though? Maybe temporarly. “Bitcoin? I don’t see it as a currency, but as a commodity. But it’s a commodity that is easily stored, easily transferred,” the Soros fund executive said.

As a result, the launch of central bank currencies (CBDC) should not impact Bitcoin. For Bank of Korea Governor Lee Ju-yeol, CBDCs will indeed lower demand for cryptocurrencies.

Yes… and no, Fitzpatrick judges on the contrary. “They want this [CBDCs] to be used worldwide, and that is a potential threat to Bitcoin and other cryptocurrencies.” However, this threat would only be “temporary”. Thus, “I don’t think it will succeed in permanently destabilizing Bitcoin,” he concludes.