Fed Tightening ‘More of an Opportunity Than a Threat’ – Grayscale CEO

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Fredrik Vold

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June 25, 2023

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Monetary tightening and potentially aggressive interest rate hikes by the US Federal Reserve (Fed) do not threaten crypto as an asset class, and could instead serve as “a shining advertisement” and “an opportunity,” according to Michael Sonnenshein, the CEO of major crypto investment manager Grayscale Investments.

Asked during an interview with the Financial Times about the outlook for crypto as the Fed starts to raise interest rates, creating an environment where there is “far less appetite for speculation,” Sonnenshein said such an environment could in fact be “more of an opportunity than a threat.”

“When investors are looking at the ways in which policymakers and regulators are treating their fiat currencies, it actually almost creates a shining advertisement” for crypto, the Grayscale CEO said.

Sonnenshein further called crypto a “non-government, non-fiat currency” that investors can have in their portfolio, and said it can be used by investors to hedge against the mismanagement of government fiat currencies.

“I believe the statistic is, on average, a government will destroy their currency every 27 years,” the CEO said, while naming “war, debasement, and hyperinflation” as potential sources of currency destruction.

Sonnenshein went on to explain that it’s important to remember that bitcoin (BTC) is used differently in the developed and developing world. He said people in the former group of countries use it mostly as “a speculative asset,” while people in the latter group often use it as “a springboard to financial inclusion or even financial freedom.”

“When you live in certain jurisdictions where you buy real assets, whether that’s a television of a vacuum cleaner […] to protect your purchasing power because your government is not doing a good job managing your currency, the ability to use bitcoin and other assets really can create financial freedom,” Sonnenshein said.
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