History has shown that every fiat currency has lost almost all of its value over time. The U.S. dollar will likely suffer a similar fate, but there is a response to dollar depreciation, said Roy Niederhoffer, chairman and founder of RG Niederhoffer Capital Management.
RG Niederhoffer Capital’s flagship fund has beaten the last two major stock market crashes, growing more than 100% during the tech bubble crash of 2001, and gained 51% in 2008. The company’s Smart Alpha fund recorded double-digit annual returns since 2000.
Speaking to Michelle Makori, editor-in-chief of Kitco News, Niederhoffer said the biggest risk facing investors today is not a potential stock market crash, but rather a gradual but certain erosion of their investment power. ‘purchase.
“It’s not like a stock market drop. You can withstand a stock market drop of 50%, 75%, it’s happened before and it’s going to happen again. It’s happened throughout the But, what most people cannot bear is that the value of their money drops by 99.99% and that has been the vice of all issuers of fiat money since Roman times,” Niederhoffer said.
The tool to combat this currency depreciation is a financial asset that has a fixed supply and is also “fungible that you can trade anywhere in the world,” he noted.
That asset is Bitcoin, and Niederhoffer pointed out several ways the world’s largest cryptocurrency is superior to silver in this regard, and also better than gold as a store of value.
Niederhoffer is an early cryptocurrency investor, having purchased Bitcoin in 2011.
“With Lightning Network, [transaction costs are] literally sub-penny, with one million transactions per second transaction capabilities coming for Bitcoin. So as a financial transaction tool, it’s far superior to cash, far superior to the Visa network, which everyone considers a standard,” he said.
Compared to gold, Bitcoin is cheaper to hold, taking into account gold storage fees, and most importantly, Bitcoin has a maximum supply cap, Niederhoffer noted.
Niederhoffer’s thesis is that Bitcoin is the ultimate inflation hedge, and while interest rates may rise this year, a marginal rate increase of around 1% or even 2% is not enough. to lower consumer prices and change investment behavior.
“My thesis during these lows is that the reason Bitcoin hasn’t reached the stratospheric levels it has the potential to reach is because of all the criticism: environmental criticism, volatility, potential for regulations, taxation, all the reasons why you shouldn’t buy Bitcoin. That’s why it’s cheap and not $100,000 or even $1 million,” he said.
Although Bitcoin has the potential to reach millions of dollars per coin and equal the market capitalization of an entire fiat currency like the US dollar, this scenario is unlikely in the medium term, Niederhoffer said.
For Niederhoffer’s year-end Bitcoin price predictions and how yield farming can generate profitable returns on Bitcoin even without a substantial price rally, watch the video above.
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