The chief investment officer of Ikigai Asset Management is highlighting one key event that’s necessary to potentially spark a rally in cryptocurrencies.
In an interview with the Bankless podcast, Ikigai co-founder Travis Kling says that beyond the US Federal Reserve’s policies which risk sending the economy into recession, it’s the ongoing conflict between Russia and Ukraine that ultimately needs to be resolved in order for the macroeconomic picture to stabilize.
“If you can get some kind of credible treaty there, that’s going to have this setup of commodity prices down – they’ve already come a lot off the high – but commodity prices down, tightening expectations down, inflation expectations down, equities up, crypto up.”
Kling believes that leading smart contract platform Ethereum (ETH) would benefit in a major way if the geopolitical and financial situations improve.
“That would be the backdrop for crypto broadly and ETH specifically to run tremendously hard if all of that kind of lines up and you end up threading the needle there.
I’m not saying it’s definitely going to happen, but I think that is the setup.”
The hedge fund manager next discusses Bitcoin (BTC), stating that the top crypto asset by market cap represents much more than being a hedge against short-term fluctuations in the consumer price index (CPI).
“You will never find me publicly anywhere saying that Bitcoin was like a CPI inflation hedge [or] a monetary inflation hedge.
It’s a non-sovereign, hard-cap supply, global, immutable, decentralized digital store value. I’ve rattled that off like 5,000 times at this point.
It’s a hedge against irresponsibility from central banks and governments globally.”
Kling concludes his analysis by comparing how Bitcoin reacts to quantitative easing (QE) versus quantitative tightening (QT). In instances of QE, central banks keep interest rates low and increase the money supply, whereas during QT rates go up and supply contracts.
“[Bitcoin] loves QE and detests QT. We’re in a QT cycle right now, but I have a high degree of confidence that that is very temporary. The market’s telling you that it’s temporary, and that it’s closer to being done than beginning.
That goes back to my point about going to move the fastest off the bottom. I think it speaks to Paul Tudor Jones’s moniker for Bitcoin being the fastest horse.”