Efficient Frontier BD Associate Andrew Tu discussed the macro impact on crypto markets with host Teana Baker-Taylor. He pointed out how the biggest change in macro in the last month has been the rise of the new administration in the United States. Now that the uncertainty is gone, and the Democrats control both chambers of Congress and the presidency, they have the ability to pass pretty strong stimulus bills in a way that probably would not otherwise have been possible. (1:58) “Now they’re talking about $1.9 trillion for stimulus. And the worry from some folks on Wall Street and some just people in general is that if you combine the monetary stimulus that we’ve already seen and that continues to happen to some extent, though much less so than March, and if you combine that with the fiscal stimulus, that we’re going to see inflation. So that really feeds into this thesis that a lot of folks have had since the beginning of digital gold as a hedge against inflation,” said Andrew. 

Meanwhile, hedge funds and funds in general as well as S&P 500 companies are looking at the USD as a potential source of weakness. There is not really inflation now, as January inflation was not bad at all. But the question is what happens when things open up, travel starts again, demand picks up in the economy, money starts to get to work and we see a velocity of money increase — does that cause a spike in inflation? 

A lot of these fund managers and companies are looking at this and asking, how do I defend myself and hedge out the risk of inflation? Bitcoin is a part of that equation. 

(4:04) “The more gung-ho progressive CEOs like Michael Saylor and Elon Musk are willing to take a huge balance sheet risk on that. But I think even for companies like Apple or just like BlackRock, you see companies looking to take small positions in bitcoin just because of the fact that it is a hard asset and you want to defend against inflation,” Andrew noted.