David Frum, speechwriter for former US President George W. Bush and bitcoin critic, has claimed that the low interest rates are fueling the rally in crypto assets. Frum suggests that the crypto-asset could experience a “rapid and deep price decline” if interest rates rise.
Institutional interest in BTC
In comments made via Twitter, Frum, who has exposed the inefficiency claims of BTC mining, also attacks the store of the value proposition of the crypto asset. He notes that “of all the pro-Bitcoin arguments, the anti-inflation deal is certainly the worst”.
Despite this criticism, the crypto asset continues to receive support from institutional investors and large corporations. For example, the electric car maker Tesla, which recently changed its investment policy, announced that it had bought $ 1.5 billion worth of BTC.
According to bitcointreasuries.org, the website that tracks companies or institutions exposed to BTC is held by large corporations over 1.3 million coins, or 6% of the total supply in circulation.
The real worth of BTC
Meanwhile, Frum’s comments on Bitcoin have sparked a debate on Twitter about the true value proposition of the crypto asset. For example, in his response to the remarks, Alex Gladstein, Chief Strategy Officer of the Human Rights Foundation (HRF), reminded the former speechwriter of the impact of BTC on human rights. Gladstein, who recently endorsed the crypto asset, said:
Only 13% of the people live under a liberal democracy with a reserve currency. The other over 7 billion live under authoritarianism or a weak currency. Bitcoin is a powerful tool for them.
Another user named Unfettered Nic Carter shares with Frum the other likely outcome of rising interest rates. The user explains, “When interest rates rise, the corporate sector and the government will go bankrupt.” Carter then asks, “What do you think is more likely – we’ll go bankrupt or we’ll print our way out?”
Meanwhile, other Twitter users like Lepton939 said they were okay with claims that BTC offers “immunity to inflation”. Even so, this user expresses concern about the volatility of the crypto asset and says:
“Since the price fluctuates so much, I’m afraid to keep it. But I suspect its real value is the extent of the illegal transactions that it houses. “
Still, other users like Jeffrey Smith praise Frum for making these remarks about Bitcoin. In his tweet, Smith notes:
I agree. Zero eigenvalue (which is related to your interest rate observation); 100% speculative value (= theory of the bigger fool); & Pollution to me. What is not to like?
While Smith suggests that “gold is very similar,” he quickly explains that unlike BTC, the precious metal can be used to make jewelry. In conclusion, he says: “As far as I know, there are no Bitcoin jewelry.”
Do you agree with Frum’s claim that BTC value will crash as soon as interest rates rise? Let us know what you think in the comments section below.
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