Ex-Goldman Sachs economist and founder of Tetras Capital, Brendan Bernstein, recently spoke out on his belief that not only is Bitcoin not a bubble but it is, in fact, a response to the bubble created by traditional banking.
Bernstein asserted his case via a series of Tweets on Tuesday, where he focused on financial history since the 1970s. He made the claim that during a time major players such as China and the US have engineered bubbles through their central paradigm of debt.
Citing Mckinsey, Bernstein noted that since the height of the financial crisis in 2009, global debt has increased by USD 57 trillion. He sees China as particularly problematic, as its impractical focus on a 6.3% GDP growth has led debt to skyrocket. Its bank asset growth has reportedly been 450% since 2008, now reaching USD 40 trillion.
Comparatively, the US has USD 17 trillion of bank assets.
In one of his tweets, Bernstein noted the unsustainability, not in the value of Bitcoin but in global debt, bond prices and USD hegemony among other issues.
18. What's unsustainable isn't BTC price but instead is:
– The welfare state
– Arms race of currency devaluation
– USD hegemony
– Global debt
– Bond prices
– S&P 500 prices
– China debt
– Global peace
– Low volatility
– Political chicanery and micromanagement
— Brendan Bernstein (@BMBernstein) April 10, 2018
Turning to Bitcoin
The argument from Bernstein echoes the sentiment of analyst David Draper, who predicted Bitcoin to recover and increase its value by the end of the year as institutions begin to see the benefit of investing.
Speaking to Bitcoinist last week, he noted, ”It is logical when institutions put money into crypto because their investments are 1,000x to 10,000x bigger than the average Joe and they will rise. And institutions are going to have to put their money in Bitcoin”.
Bitcoin has still been receiving negative coverage from mainstream institutions and outlets, however. UK bank Barclays this week described Bitcoin’s volatility as an ”infectious disease”. Time magazine also described the potential legalization of Bitcoin ETF’s in the US the ”clearest sign yet the Bitcoin bubble has to burst”.
There is clearly a different paradigm of thinking between Bitcoin proponents such as Bernstein and Draper, and those championing the more traditional path of finance. This makes it a challenge for Bitcoin to receive support from the more orthodox institutions and outlets that still promote more conventional forms of banking.