Elizabeth Warren vs Crypto Bull-Run w/ Mark Yusko
Mark Yusko of Morgan Creek Capital believes much of the high inflation over the past couple years has actually been currency devaluation rather than true inflation driven by excess demand. He points out that the US money supply doubled over just 18 months during the pandemic through extensive stimulus programs. As the Federal Reserve now contracts the money supply again, it's no surprise inflation readings are slowing. Still, the long-term impact has simply brought us to a "new normal" where prices sit 50% above the stated Fed 3% inflation target.
Yusko expects major new crypto demand to emerge as large wealth managers like UBS finally open the floodgates to client crypto investments next year. While they represent over $30 trillion in assets under management, even 1% allocated to crypto would equal $300 billion of inflows for a tiny asset class like bitcoin – likely sending prices soaring. Beyond fresh institutional demand, Yusko believes bitcoin and select other crypto assets will additionally benefit from generational wealth transfers over the coming decades. Crypto-savvy millennials stand to inherit almost $40 trillion from baby boomers in the years ahead.
While anti-crypto legislation periodically crops up on Capitol Hill, like Senator Warren's proposal to restrict decentralized finance protocols, Yusko thinks there's little long-term risk of impact. Such bills rarely gain enough momentum to become law due to the growing power of the crypto lobby and silent majority. Some prudent regulation establishing guard rails for the ecosystem is widely expected in the years ahead instead, though the Commodity Futures Trading Commission may play a bigger role than the Securities and Exchange Commission.
As for where bitcoin prices could reach this cycle, Yusko notes the token's fair value should double to around $100K following May's halving event based on historical patterns. New demand drivers in 2023 like the ETF then create upside potential to possibly $150-220K. However, reduced market leverage makes extreme overshoots above fair value less likely than previous bull runs. While impossible to predict, bitcoin appears primed for continued solid gains on the heels of accelerating mainstream adoption.
Guest: Mark Yusko, Founder, CEO and Chief Investment Officer of Morgan Creek Capital Management
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