In brief

  • The Federal Reserve is pumping trillions of dollars into the US economy, in response to the coronavirus crisis.
  • Diginex CEO Richard Byworth says the Fed’s plans to raise inflation rates is driving awareness of Bitcoin among institutional investors.
  • The introduction of cryptocurrency futures products across exchanges has seen the crypto derivatives market scale, said Byworth.

As the Federal Reserve pours trillions of dollars into the United States’ economy to combat the coronavirus crisis, cryptocurrencies are becoming increasingly appealing to institutional investors, according to Richard Byworth, CEO of Hong Kong-based digital financial services company Diginex.

Byworth argues that the Fed’s plans to raise inflation rates, coupled with political uncertainties around the upcoming presidential election, could lead to investors seeking digital assets as a way to hedge their portfolios. 

“I think that we’ve got to a point with central banks where there’s no reversing it,” said Byworth in an interview with media partner Forkast.News. “Obviously Trump wants to get re-elected, he’s not about to let the Fed stop easing or printing money—and so when you look at Bitcoin as a scarce digital asset, that’s something that’s really starting to create awareness around investors looking to hedge their portfolio with institutional and retail.”

Recently, the Fed has outlined plans to seek low interest rates for years, actively pursuing higher inflation as it attempts to recover a pre-pandemic level of economic activity; previous statements from the Fed and economists point toward an “average inflation” rate of over 2% annually would be tolerable.

Good for Bitcoin, bad for the dollar

Well-known investors such as Paul Tudor Jones and Tim Draper have been bullish on the growth of cryptocurrencies, and Draper has even bet that the price of Bitcoin could surge to $250,000 by 2023.

“I think that the route to getting to a $250,000 price in Bitcoin means that you’ve seen a significant devaluation of the dollar price,” said Byworth. “I think it can get there if the Fed were to continue down a road of loss of control of the printing press... from my own perspective I see a lot higher price from where we are today even the next six months.”

"The route to getting to a $250,000 price in Bitcoin means that you’ve seen a significant devaluation of the dollar price."

The biggest change over the last year, Byworth argues, has been the introduction of cryptocurrency futures products across broad exchanges. "That’s really seen the growth of the derivatives market scale from being very, very limited to where we are today," he explained. 

Institutional investment into digital assets like Bitcoin has grown despite the coronavirus pandemic; the world’s largest digital assets management firm Grayscale Investment’s single-asset investment funds for Bitcoin and Ethereum totaled $3.5 billion and $410 million in July, respectively.

This story was produced in collaboration with our friends at Forkast, a content platform focused on emerging technology at the intersection of business, economy, and politics, from Asia to the world.