Bitcoin 2021, Miami — With inflation on the rise, global debt hitting record numbers and consumer sentiment on the decline, investors are desperate for stores of value. 

“The reason I was so attracted to bitcoin early on was because the cost of capital is completely broken,” podcaster and investor Preston Pysh said during a panel discussion at the Bitcoin 2021 conference in Miami. 

Pysh, who was joined by entrepreneur and author Jeff Booth, founder of Morgan Creek Digital Mark Yusko and trader Greg Foss, pointed to the current fiscal policy in the United States. 

Panelists at Bitcoin 2021 in Miami
The Bitcoin Macro Landscape panel at Bitcoin 2021 in Miami

The Federal Reserve has been printing dollars at an unprecedented rate in its attempt to save the American economy from the effects of the pandemic. It’s a dangerous strategy, Pysh said, and its impacts are already being reflected in prices. 

“If you are stepping into the bond market, creating a bunch of fiat, and then just buying the fixed income bonds and pushing the yield lower, it pushes the price of everything higher,” Pysh said, referring to the Fed’s current monetary policy. “The cost of capital for equities, real estate and everything else is constructed as a premium on top of that, and that’s a recipe for disaster.” 

The Fed has shown no indication that it intends to raise interest rates or start tapering any time soon, and the recent disappointing jobs data is unlikely to ease central bankers’ concerns. Inflation is a top concern for consumers and experts. Interest rates cannot keep up with inflation, Yusko said, and investors need to hedge. 

“Money only exists in a couple of places. Gold is money. Bitcoin is the digital version of gold, and bitcoin will replace gold, but not completely,” said Yusko. “It’s not really that bitcoin is getting better, it’s that everything else is getting worse and that’s why bitcoin is the perfect store of value.” 

When looking at crypto versus traditional markets, there is no comparison, according to Lukka co-CEO Robert Materazzi.

“From an investment standpoint, if you look at the last two years of any market side by side, I think the numbers speak for themselves,” he told Blockworks separately, referring to the difference in returns between traditional and crypto securities. 

Panelist Foss pointed to the numbers too. Global debt today is the highest it has ever been. Central banks all over the world are mirroring the Fed’s approach, and economies are in trouble, he warned. 

“We are in a debt spiral,” said Foss. “Global debt right now is four times global GDP. Let’s assume we have a 3% average interest rate, which is low, that means global GDP has to grow by 12% per annum just to keep pace with the organic growth of the numerator.”

The global debt problem is not going anywhere anytime soon, and central banks need to take advantage of the technology, Materazzi said. 

“There are a lot of things that I believe we should be doing in the United States and globally that we’re not yet, or maybe I’m not aware of yet,” said Materazzi. “For example, tokenizing our national currency, that’s a future vision and a really big statement. The government can benefit with so many processes if they do that in an intelligent way in the future.” 

Read more of our coverage from Bitcoin 2021 here.

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    Casey Wagner is a New York-based business journalist covering digital assets and macro economics. Prior to joining Blockworks, she reported on markets at Bloomberg News. She graduated from the University of Virginia with a degree in Media Studies.