“The economic shock wave that’s coming is going to be like nothing that any of us has ever experienced because it’s going to be very similar to the 1930s,” said the hedge fund manager Mark Yusko, the CEO at Morgan Creek Capital Management on CNBC’s “Trading Nation” on Thursday.
From mid-February, coronavirus hit the world economies hard and in mid-March, the Dow plummeted 28% from its record highs while S&P 500 tumbled 26% from its ATH.
The hedge fund manager who has $1.7 billion in assets under management said it’s not late to cut losses as the market is not giving any signs of recovery and advised to move into cash, because,
“Cash is king (and) we’re in for a very drawn-out bear market.”
Apart from cash, gold miners and bitcoin are attractive options, according to him, who believes cash is king for now but “Bitcoin is next in line to the throne.”
The flagship cryptocurrency lost over 63% of its value from its mid-February high. But since then, Bitcoin recovered 74% as it currently trades around $6,700.
Bitcoin is “insurance against the collapse of the financial system,” said Yusko.“The stimulus-response from the government is going to have a negative impact on currencies globally, particularly western currencies. So, you want to have something that appreciates in value. Bitcoin is going to do that.”
According to the founder and CEO of Galaxy Digital, Mike Novogratz, with the central banks printing money, it has begun to feel like money is growing on trees.
During this time, “one story that is so crystal clear right now is bitcoin.” For the hard asset, this is the perfect setting as central banks monetize their debt.
“We’re going to have four or five six trillion dollars of fiscal debt monetized by this and literally it is a printing press. It’s exactly why bitcoin was created,” said Novogratz.
Interestingly, interest from institutions is coming back as the Bitcoin proponent shared, “I am seeing investors I never saw before, hedge fund investors, high net worth investors getting into Bitcoin for the first time.”
Not Just Novogratz, others like Ari Paul and Blockstream CEO Adam Back also reported the same.
“Have referred and helped people buy > $1mil BTC last 2weeks. Good investors too, long term view, cold stored. New buyers mostly, who never dove in before but become interested due to the price window and asset class as an uncorrelated hedge, due uncertain economic backdrop,” said Back.
The trading volume on regulated exchanges that cater to institutions, CME and Bakkt has also started seeing an increase in trading volume after getting hit along with the price crash last month, unlike spot exchanges that saw increased interest from retail investors.
Novogratz also shared how the first reaction of the people is to jump in cash, as seen in USD but according to him it won’t be long before they look for a much safer option as more stimulus gets pumped into the market.
That option would be bitcoin as Novogratz said, “I’m getting calls from real big investors who had never thought about it before are saying ‘tell me about this bitcoin.’”