With the US Banking crisis increasing day-to-day concerns, investors are keeping a close eye on Bitcoin (BTC) and Gold prices. So, what do experts expect for Bitcoin and Gold? Here are the details…
The famous Bitcoin Strategist explained: “There may be a loss of 10 trillion dollars with the banking crisis!”
According to Greg Foss, Bitcoin Strategist and Executive Director at Validus Power Corp, $10 trillion in equity capital could be “wiped” from the banking system as more banks fail. With more than three decades of experience in high-yield credit trading, Foss responded to Federal Reserve Chairman Jerome Powell’s recent statement at the FOMC Press Conference Wednesday that the U.S. banking sector is “solid and resilient,” adding that “Jerome Powell is a terrible poker player.” I think he is a player,” he drew attention with his words.
However, in an interview with former Fox News host Tucker Carlson, Foss cited Elon Musk, who claimed that as commercial real estate loans default, more banks will fail. Foss said in his statements that “many more” banks could collapse. The expert’s explanations are as follows:
The biggest banks are too big to fail, which means they will be bailed out, But that doesn’t mean shareholders will be bailed out, and that’s where a lot of money could be lost. My estimation is that there is at least $10 trillion in bank equity around the world, and that money could literally disappear if the system crashes.
The famous strategist touched on the price of Bitcoin and gold for the Fed’s interest rate hike!
As you know, the Fed increased interest rates by 25 basis points on Wednesday and some Fed personnel are predicting a recession. Fed Chairman Powell disagrees with these predictions, saying that a soft landing is still possible, but some experts disagree. Addressing rising interest rates, Foss said, “This is the first time in history I’ve seen the Fed predict a recession as a group,” adding, “I don’t think Powell can put the needle through this soft landing.” He made reference to Powell in his words.
However, at this point, Foss stated that “it doesn’t matter” what the Fed does due to the “restriction in credit standards” due to bankrupt banks, and that this will cause a contraction in the real economy. conveyed his words.
Longtime BTC advocate, Foss argued that owning Bitcoin reduces investors’ risk exposure as it provides a hedge against US debt and the collapse of the dollar. Seeing Bitcoin as an “insurance”, Foss quoted the following words:
$200 trillion is the obligation of the United States alone. If you take 160 basis points times $200 trillion… $3.2 trillion would be the implied insurance value of the United States… What is Bitcoin traded for? About half a trillion dollars.
Foss said that besides Bitcoin, gold is a good asset for investors to keep in their portfolios. However, the famous name said, “Sell part of your bond portfolio to buy Bitcoin. Because if you have 0 percent Bitcoin, you are actually taking more risk.” conveyed his words.
Experts emphasized that a little more time is needed for the rise of gold!
The gold market continues to show investors its potential as prices tested record highs above $2,080 an ounce this week; however, while there are many long-term bullish sentiments in the market, the conditions to trigger a sustainable rally are not yet present. Gold’s rise to $2,085 came after the Federal Reserve increased interest rates by 25 basis points and shifted to a more neutral monetary policy. According to experts, it seems that the central bank will not raise interest rates again; but they are not in a position to cut interest rates anytime soon. The words of Powell at his press conference on Wednesday drew attention:
As the Committee, we are of the opinion that inflation will not decrease very quickly. It will take some time, and in the world, if this forecast is generally correct, it would not be appropriate to cut rates and we will not cut rates.
Despite Powell’s consistent message, markets began pricing in a possible rate cut as early as July. These pricing remained at these levels until they were faced with a harsh dose of reality. On Friday, the Bureau of Labor Statistics announced that the U.S. economy created 253,000 jobs last month, significantly exceeding the 180,000 job expectation.
According to analysts, it does not seem possible for the central bank to change interest rates in this environment. While market expectations regarding interest rates continued to change, gold prices were hit hard; Prices fell more than 2 percent at one point on Friday, testing the support of $2,007 an ounce. Many market analysts say gold market dips should be bought amid unprecedented uncertainty.
“Gold price may go up!”
Experts announced their forecasts for gold prices. George Milling-Stanley, chief gold strategist at State Street Global Advisors, said in an interview that investors are not seeing a peak in gold, and prices will be driven by safe-haven demand.
Gareth Soloway, InTheMoneyStocks.com Chief Market Strategist and President of VerifiedInvestingEducation.com, told Makori that the banking crisis could cause the S&P 500 to drop 20% this year, pushing gold to $2,300 an ounce.
Another reason why many analysts continue to rise on gold despite the recent decline is that there is still a significant amount of untapped potential. Gold prices have remained relatively stable above $2,000 an ounce as investors have just started to join the rally. In other news, on Friday, the World Gold Council released its Global Demand Trends report for the first quarter and said that global gold demand fell by 13 percent compared to the first quarter of last year. The decrease was led by investment demand, which decreased by 51% to 273.7 tons. Investors started entering gold-backed exchange-traded funds only in early March, when the banking crisis began. These inflows were not enough to compensate for the outflows seen in January and February.
In total, there was an insignificant outflow of 29 tons in the ETF market; however, this was a dramatic decrease compared to the reported 270 tonnes entry in the first quarter of 2022. WGC Research Manager Juan Carlos Artigas said he sees solid growth potential for investment demand in the current environment.
As the Fed continues its policy of tightening, it’s putting pressure on other parts of the financial system as we’re starting to see it. This can potentially be resolved relatively quickly, so the time to make sure you add some hedges to your portfolio is right now. There are many obvious reasons to hold some gold right now.
