Bitcoin Could Rally 40% by Year End: Blockchain Founder

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Welcome to the weekend. Phil Rosen here, writing to you from Manhattan.

I’m somewhat skeptical when it comes to digital assets, but so far this year bitcoin has been the best performing asset by a landslide, it’s up over 73%.

I caught up with a blockchain executive to find out why this rally might see more upside as the economy slows.

If you have any suggestions for who I should interview next, let me know on Twitter @philrosenn or email me at [email protected].

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A pile of Bitcoin slugs sits in a box ready to be minted on April 26, 2013 in Sandy, Utah. George Frey/Getty Images/AFP/File

Bob Ras is the co-founder of blockchain company Sologenic. This conversation has been lightly edited for length and clarity.

Phil Rosen: What is the impact of the banking crisis and the Fed on the outlook for bitcoin?

Bob Ras: As the big banks have collapsed, it seems more clear by the day that these investors view bitcoin as a hedge due to its resistance to decentralized censorship and lack of counterparty risk.

The Fed is increasingly expected to ease its monetary policy and effectively inject a lot more liquidity into the market to shore up the financial system. And bitcoin is at the forefront of this scenario, pointing to a future that is actually a return to relatively low rates.

I wouldn’t be surprised if $40,000 could be reached by the end of this year.

What has fueled bitcoin’s strong rally to start 2023 so far?

One of the main reasons bitcoin performed so well is that it got really oversold during the FTX crash.

Additionally, there is on-chain evidence that more and more people and institutions have been accumulating bitcoin during the dips, which has essentially resulted in a supply shock.

With so few sellers remaining, any increase in demand has an outsized impact on the price.

What is the downside risk ahead that could weigh on bitcoin prices?

The biggest risk would be an acute credit crisis that would cause a rapid contraction.

In such a scenario, all assets would have a correlation with each other, including bitcoin and even gold. I’m not sure such a scenario will happen, but it is possible and would trigger huge volatility not only for bitcoin but for all markets.

Read the full behind-the-scenes story of bitcoin.

What do you think of Ras’s outlook on the world’s most popular cryptocurrency? Let me know.

And here are the top stories from the markets this week:

Paul Krugman. REUTERS/Brendan McDermid

1. A stock portfolio created by ChatGPT outperforms the UK’s top investment funds. The theoretical portfolio created by Finder.com consists of 38 stocks and has generated returns of 4.9% over eight weeks. Here are its main holdings.

2. Leading economist Mohamed El-Erian has warned of potential collateral damage from the First Republic-JPMorgan deal. The Wall Street giant agreed Monday to acquire most of the battered company’s assets, but El-Erian sees four critical and unforeseen consequences that could materialize as a result.

3. UBS analysts just named 40 cheap stocks they expect to outperform in a recession. Weaker economic growth will help defensives dominate cyclicals, and this collection of relatively cheap picks looks poised to perform well in a weaker landscape.

4. Russian gold is now flooding the United Arab Emirates, Hong Kong and Turkey. Sellers have had to find new buyers for the key metal now in light of wartime Western sanctions. Big gold buyers like HSBC and JPMorgan have shunned business with Moscow, leaving billions of dollars worth of gold in need of new landing spots.

5. Nobel economist Paul Krugman doesn’t think dollar dominance is of much value to the United States. The notion is overstated, in his opinion, and he thinks all dollar doomers are best ignored: “Or better yet, consider what their hyping of a non-issue says about their own judgment.”

6. Apple drew $1 billion into its new high-yield savings account in four days. The iPhone marker launched the account last month, with a return of 4.15%. And the number of people who have signed up so far is only a fraction of the total number of iPhone users.

7. The country’s leading market watchers and policy makers are worried about the credit crunch and spiraling commercial real estate sector. It’s an uncertain time for the US economy, with slowing growth and inflation that remains stubbornly high. Here’s what three experts expect to happen.

8. Yankees legend A-Rod learned two key rules about investing from Warren Buffett. Alex Rodriguez told Bloomberg he became a business partner for the billionaire after the Berkshire chief secured his multi-million dollar gambling deal. The pair made a habit of meeting up in Omaha and Rodriguez still carries the lessons with him today.

9. These 20 defensive stocks could help your portfolio weather a downturn. Morgan Stanley’s top strategists have warned that a strong earnings season could provide a false sense of security. But they see this batch of names as a potential corner of opportunity.

10. BlackRock’s head of bonds, Rick Rieder, manages $2.7 trillion. He told us how he positions cash for a declining economy and the portfolio strategy he uses to avoid losses right now.

Organized by Phil Rosen in New York. Feedback or tips? Tweet @philrosenn or email [email protected]

Edited by Max Adams (@maxradams) in New York.

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