Bitcoin’s price is a lie, says Morgan Creek Capital chief

Word on the Block | Forkast.News

The price of Bitcoin has dropped by more than 22% in the past 30 days. Predictions that the world’s original crypto would top US$100,000 by the end of the year are beginning to look overly optimistic, to put it diplomatically. Yet Mark Yusko, chief executive and investment officer at Morgan Creek Capital, is holding firm in his belief that Bitcoin will be worth US$250,000 within the next five years. He thinks Bitcoin’s current low price, as denominated in U.S. dollars, is bunk.

“It’s interesting that in the short run, when prices fall, as they have in the last few weeks, people start to get a little antsy and start to question these long-term trends and fundamentals,” Yusko told Forkast.News in a video interview. “Price is a liar.”

In terms of Bitcoin’s actual value, the truth lies in gold, Yusko said, asserting that fiat currencies can conceal changes in real value.

“If you look at U.S. stocks, we’re having new all-time highs,” he said. “That’s because we denominate in a depreciating asset — the dollar.”

The S&P 500 has soared more than 98% over the past five years. However, last month, it took just 2.57 ounces of gold to buy the index, the same as it did more than 16 years earlier, in October 2005. That price was unchanged from June 1997, 24 years ago. In contrast, Bitcoin, currently trading at a value worth around 26.97 ounces of gold, has skyrocketed more than 60-fold in the five years to date.

By the end of November, U.S. Consumer Price Index inflation was running at 6.8%, the highest level since 1982. The inflation rate across the 19-member eurozone had reached 4.9%. Bitcoin — often touted as a safe-haven asset and a hedge against inflationary pressures — had slumped to below US$50,000 for the first time since early October.

Yusko attributes Bitcoin’s slide to the launch of a series of U.S. exchange-traded funds (ETFs) based on Bitcoin futures.

“[What a Bitcoin futures ETF] does is allow me to create a paper version of Bitcoin, which is completely independent of the 21 million supply … And that contract then allows someone to go short on the other side,” Yusko said. “This time, within days of (Bitcoin’s) peak at US$68,000 … (came) the issuance of (ProShares Bitcoin Strategy ETF) BITO. And I believe a bunch of banks and others have gotten short on the other side, and they’re pushing the price down a little bit.”

Watch Yusko’s full interview with Forkast.News Editor-in-Chief Angie Lau to learn more about the secular and cyclical dynamics of Bitcoin, the impact of Bitcoin futures ETFs on the market, how investors should distribute wealth in the crypto space, and upcoming opportunities in 2022.