Why this venture capitalist thinks crypto could be the world’s most reliable macro-indicator 🚨 This article is 4 years old...
Why this venture capitalist thinks crypto could be the world’s most reliable macro-indicator
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Updated: Jun. 22, 2020 at 8:51 am UTC
Photo by Hudson Hintze on Unsplash
The crypto industry has been seeing a tremendously clear and well-defined evolutionary shift in recent times, with Bitcoin’s price action seen in the time following its mid-March meltdown largely favoring buyers despite there being turbulence in the global markets.
This has rekindled “safe haven” narratives, with the incessant money printing required to fuel ongoing economic stimulus packages also shining a light on the importance of BTC’s absolute scarcity.
One prominent venture capitalist is now noting that he believes top crypto assets like Bitcoin and Ethereum could soon become more reliable macro-indicators than traditional assets like stock and bonds.
Chris Burniske: Bitcoin and Ethereum to become better macro-indicators than traditional assets
Despite unemployment being at depression-era levels and many other economic indicators flashing major warning signs regarding the state of the economy, the traditional markets have been performing quite well as of late.
All of the benchmark indices are only sitting slightly off of their all-time highs, while many individual companies are seeing their stock prices set fresh highs.
That being said, the government intervention that has propped the markets has made historical macro-economic indicators like stocks and bonds incredibly unreliable.
This has led Chris Burniske, a partner at venture capital firm Placeholder, to note that the crypto markets may offer the world with better insight into the state of the global economy.
While explaining his reasoning, he stated that the nascent market’s 24/7 liquidity and lack of government involvement are the two primary factors that support this postulation.
“BTC & ETH could become more reliable macro-indicators than stocks & bonds, given all the government meddling in the more traditional markets, not to mention global 24/7 liquidity in crypto.”
If this theory pans out, macro investors in traditional assets may begin increasingly looking towards the crypto markets for insights into the state of the global economy.
This could mean there’s turbulence ahead for the crypto market
As for what this could mean for Bitcoin and the rest of the crypto market heading forward, Burniske notes that “macro-jitters” could cause digital assets to see some near-term weakness.
In spite of this, he also notes that he does not believe that this potential move lower in the near-term is emblematic of the market’s future – which remains bright.
“The longer BTC & ETH fade here the more likely we take another leg down to test key supports, despite the strong fundamentals of both. I would see this as more macro-jitters driven than specific to crypto’s future,” he said.
This potential trend could help the crypto industry further establish its position on the global stage.
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Bitcoin
$63,606.23
Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Ethereum
$3,123.18
Ethereum is a decentralized, open-source blockchain platform that enables the creation of smart contracts and decentralized applications (DApps).
Chris Burniske is a partner at Placeholder, a New York venture firm that specializes in cryptoassets.