- The Chief Investment Officer (CIO) of Soros Fund Management, Dawn Fitzpatrick, has stated that the rise of CBDCs may lead to Bitcoin’s devaluation.
- However, Bitcoins and other cryptos are not expected to crash completely.
- The relatively stable position it has acquired in the past two years has given it a cushion against sudden market depreciation.
Cryptos have reached a saddle point
In statistical vernacular, a saddle or an inflection point is one where there is no rise or fall in a commodity’s market prospects. Dawn, the CIO of Soros Fund Management, feels that crypto is one such entity that has reached a point of inflection. In an interview with Bloomberg, she stated that though the infrastructure surrounding cryptos is innovative and exciting, it is saddling currently. She also cited personal examples of her company’s investments in the recent past, including a fund infusion of close to $200 million in a Bitcoin tech firm named New York Digital Investment Group (NYDIG). Soros is also a very successful hedge fund as it continually returns about 44% in profits per year since 1970.
CBDCs pose an imminent threat
Dawn was also of the opinion that the large-scale introduction and mass adoption of CBDCs would spell bad news for Bitcoins. Citing the example of a recently successful airdrop of CBDC in Beijing, China, she also remarked that they would be here much quicker than earlier expected. She also added that this might be part of a more significant strategic move by China as it plans to use its digital tokens worldwide. Moreover, CBDCs will also have the full backing of their respective governments, unlike Bitcoins, which may be a potential game-changer.
Dawn also explained that the recent hype surrounding cryptos might be traced back to the fear of compounding fiat currencies’ debasement. This is especially true in the current context, where there is an increased circulation of dollars by about 25% in the past year alone. This has thus prevented people from perceiving Bitcoin commodities as fringe assets. Moreover, Dawn also elaborated that gold investments are struggling to gain traction under the current circumstances as Bitcoins have proved to be more attractive investor destinations.
Though it may be true that Bitcoins face a potential threat from CBDCs, it is expected to be only temporary until it stabilizes again.
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