How Crypto Can Become an Inflation Hedge per Coinbase CEO

crypto hedge inflation

In a new interview, Brian Armstrong (CEO, Coinbase) shared his perspective on the current trends in crypto. Amid the months-long dump and trajectory ahead, the CEO believes that Bitcoin still has the potential to become the new gold standard. Moreover, he believes that cryptocurrency is the chance for the West to boost its competitive edge against the rising challenge in China. 

Commenting on Ray Dalio’s theory of “The Changing World Order,” he also stated that if adoption continues to rise, there’s a chance for a “new world order” to revolve around competition between a centralized East and a decentralized West. 

Crypto as a Hedge Against Inflation

During the interview in Around the Block, Armstrong compared today’s bear market to previous ones. This time around, he believes the market has vastly different characteristics. Namely, he believes that crypto now has numerous use cases compared to prior cycles. 

Additionally, there’s no blow-off top happening to the prices of tokens. This means that 85% down from ATHs may not happen for the major assets. 

As he addressed these issues, he attributed the change in part to the macroeconomic environment that exacerbate the dump. This is likely because investors tended towards a perspective that the asset was similar to a risky tech stock. 

Building upon this, he also stated his belief that the total market cap needs to increase by 5-10x to make crypto a hedge against inflation. This reflects a common view among certain crypto experts. 

Decentralized vs Centralized: Competition in the West & East

Ray Dalio, a renowned hedge fund manager, famously stated that the world’s current order, led by the United States, is likely to change. He based this on rising challenges and competition from developing markets like China. 

During the interview, Armstrong admitted a certain level of decline in America, a shared perspective with Dalio. Conversely, China seems to be on the rise. However, he stated a belief that the “new world order” may be less specific to countries. 

As Bitcoin rises as a candidate to set the new gold standard across the globe, the CEO argued that a decentralized monetary system could position Bitcoin as the world’s reserve currency. In doing so, there’s potential to provide a boost for the West. 

He then added that without a move from the West, the Chinese Yuan could one day replace the dollar. 

“Crypto represents a really compelling alternative for the West and the Western values to basically embrace the decentralization as the new world order because, otherwise, the Chinese Yuan may become the new reserve currency of the world…And so it may be actually beneficial to have a decentralized West to compete with a centralized East.”

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