I respect Jim Bianco a lot, and he has been correct on the no landing/soft landing economy, where many macro analysts have been incorrectly bearish. However, in a recent appearance on Real Vision’s Daily Briefing, he made some points about Bitcoin, that seem demonstrably false. I’m not a Bitcoin fan, I believe there are serious flaws to its fixed/deflationary supply. Gold expanding at 1-2% a year proved to be too deflationary under certain circumstances (war/baby boomers/etc.), so Bitcoin would be even worse.
Still, my issues with his points here are more philosophical in that they are simply not true:
- He states that putting Bitcoin in an ETF simply makes it part of the existing system. It may increase correlation in price (as if it wasn’t already), but Bitcoin (and gold) can be correlated, but still have different properties such as custody compared to traditional financial assets. Just because there is an ETF doesn’t mean you can’t own it directly.
- He says it somehow takes away from Bitcoin and DeFi being a useful tool in developing countries with weak rule of law and/or financial systems. However, if increased institutional adoption brings decreased volatility and increased legitimacy to Bitcoin, it arguably makes it more usable in developing countries, or for people fleeing persecution.
- He says it distracts from development in the DeFi space. However, if institutional money purchasing Bitcoin frees up more speculative capital from early adopters to invest in other more early-stage projects, that could increase development.
- Finally, he says Gold is simply another fiat currency and goes up when the USD goes down. This is true for two reasons. 1) Gold has been going up with the USD recently, even if short-term correlations are inverse. 2) Gold has gone up over time against the USD, every other fiat currency other than the Swiss Franc has gone down over time against the USD, and gold has still gone up in Swiss Franc terms.