Bitcoin soared to a fresh all-time high of $56,425 earlier today, and its market cap reached $1 trillion for the first time in history. Despite a powerful market-leading cryptocurrency surge, the Federal Reserve Bank of Boston remains unaffected by the digital asset.
Federal Reserve Bank of Boston President Eric Rosengren said he was personally shocked that Bitcoin has continued to prosper.
In an interview with the New York Times, Rosengren said,
“I would expect, over time, Bitcoin prices to come under pressure.”
According to him, there is no long-lived use case for digital currencies like Bitcoin in a world where central banks will eventually offer their own alternatives. Rosengren pointed out,
“I would suspect, down the road, that a number of central banks will have digital currency,” he added “When there is a digital currency available, other than the underground economy, it’s not clear why people would use Bitcoin.”
He also noted that China and Sweden are well on their way to adopting their own Central Bank Digital Currency (CBDC), noting that the US was not far behind in the process.
According to him, the Boston Fed has been aggressively investigating the idea of implementing a CBDC in the United States.
Most investors making allocations to Bitcoin do not do so to trade through digital currency, but to invest in an alternative ‘value shop.’ Bitcoin is also compared to gold as an effective inflation hedge asset during times of high inflation.
Tesla CEO Elon Musk also commented on Tesla’s recent $1.5 billion purchase of Bitcoin saying that the logic behind this purchase was not specifically representative of his view.”When a fiat currency has negative real interest, only a fool would not look elsewhere,” he said on Twitter.According to Musk, getting a bitcoin is simply a “less stupid” type of liquidity than currency.
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