Institutions Will Favour Bitcoin, As 2020 Will Be Worse Than 2008 Recession, Says An Economist

It is often predicted that the dawn of cryptocurrency will arrive at the foot of an economic crisis. Nouriel Roubini, a well-recognized economist and a professor at Stern School predicts that a financial crash will hit the US markets by 2020 and it shall be worse than the 2008 recession.

Roubini outlined on Project Syndicate, the 10 major factors that will onset the next financial crisis and amongst them, the major contributor will be the rising inflation rate dictated by the Federal Reserve (FED). Roubini wrote:

“Second, because the stimulus was poorly timed, the US economy is now overheating, and inflation is rising above target. The US Federal Reserve will thus continue to raise the federal funds rate from its current 2% to at least 3.5% by 2020, and that will likely push up short- and long-term interest rates as well as the US dollar.”

In 2018, the cryptocurrency markets have suffered its fourth-worst correction in history after recording an 80 percent decline in valuation. Although, several cryptocurrencies still managed to outperform a handful of national currencies including the Argentinian peso, Venezuelan bolivar, and Turkish lira.

Roubini emphasizes that by the next recession the financial obligations of the US will intensify leading to circumstances that are worse than the 2008 financial crisis. Roubini further explained:

“Finally, once the perfect storm outlined above occurs, the policy tools for addressing it will be sorely lacking. The space for fiscal stimulus is already limited by massive public debt. The possibility for more unconventional monetary policies will be limited by bloated balance sheets and the lack of headroom to cut policy rates.”

Would Bitcoin be a Saviour?

Bitcoin has its fair share of critics, including Roubini who believes that cryptocurrencies offer no value to the economy and that they have failed to evolve into major currencies.

The founder and partner at Morgan Creek Digital, Anthony Pompliano (a.k.a. “Pomp”), states that the institution will be pushed to invest in the cryptocurrency market as an alternative to traditional assets in the upcoming years. The rise in adoption of cryptocurrencies by regulated financial institutions like Goldman Sachs, Morgan Stanley, and Citigroup, embodies Pomp’s statement.

Unpopular opinion: Institutions will come under pressure in next 5 years if they have 0% exposure to Bitcoin & digital assets. As fiduciaries, they need to invest capital in the best risk-adjusted opportunities.

Digital assets historically provide best returns per unit of risk.

— Pomp ? (@APompliano) September 16, 2018

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