Tom Lee says interest rate cuts help bitcoin

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Tom Lee, the Fundstrat Global Advisors co-founder, has made a statement claiming that the recent US interest rate cuts announced by the Federal Reserve should provide a boost for bitcoin.

He made the remarks on Fox Business news on 31st July: “Bitcoin’s becoming increasingly a macrohedge for investors against things that could go wrong. Rate cuts are adding liquidity. Liquidity is pushing money into all these risk assets and also hedges, which is helping Bitcoin.”

He had some other comments to make about bitcoin, which at the time of the news item going live was making a price recovery. In terms of price, Lee thinks it is plausible for the coin to retake its all-time high by the end of the year. He remarked: “We don’t have a target for Bitcoin, but the prior high was $20,000. I think there’s a good possibility that Bitcoin reattains that high this year.”

Lee also discussed Facebook’s Libra, commenting on the Federal Reserve Chairman Jerome Powell’s concerns about the stablecoin. Powell said that Libra, “poses serious concerns regarding privacy, money laundering, consumer protection, and financial stability.” Lee doesn’t agree with him, and in particular said that Powell’s worries don’t apply to bitcoin: “Libra is quite different in its architecture from Bitcoin, so I think that some of his comments are fair about Libra, but they don’t actually apply to Bitcoin.”

Chamath Palihapitiya, CEO of VC firm Social Capital, appears to support Lee’s claim that bitcoin is a ‘macrohedge’, and even went so far as to call it the single best hedge against the traditional financial system. He told CNBC’s Squawk Box in July, “It is the single best hedge against the traditional financial infrastructure. Whether you support fiscal and monetary policy or not, it doesn’t matter: this is the shmuck insurance under your mattress.”

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