Analyst urges investment in bitcoin and treasuries, warns of US bank risks
In his latest interview on Stansberry Research with Daniela Cambone, Macro Guru Hugh Hendry, expanded his views on the U.S. banking system amid the uncertainty surrounding the financial sector. Specifically, he urged people to consider bitcoin (BTC) as part of their investment.
Valery Ignatov opined, saying “Bitcoin can be viewed as a protective asset during a high key rate and relative instability in the banking sector.” Adding that “it can be a good alternative to US government bonds, despite its volatility”.
US bank could restrict cash withdrawals
In the interview, Hendry pointed out that the Federal Reserve’s (Fed) tight monetary policy has increased the probability of customers being restricted whenever they want to make withdrawals.
In his assessment, the probability would have been close to zero a year ago.
However, the situation has been worsened by a hawkish regime where interest rates hike has been “fastest and of the greatest magnitude.”
He added that at this time, having all your money in the banking system seems prudent and “certainly not congregated around one lender.”
Bank withdrawal blanket limits remain unknown in the U.S. Still, holders in other parts of the world, including Europe, should be cautious. In the last decade, restrictions were implemented amid the mid-2010s debt crisis in places such as Greece and Cyprus.
Meanwhile, cash withdrawals are in place in Nigeria, where individuals can withdraw 20,000 nairas ($43) weekly. The country’s leaders say the move is intended to pull cash out of the system as the move toward a fully digital economy nears.
Hendry believes the American banking industry might see more deposit flights since customers can pull out their funds with a button. In addition, the Fed rate hikes have made it attractive for depositors to remove money from banks and put it into market funds.
Americans advised to invest in treasuries and bitcoin
It is not the first time Macro Guru has warned users about the probability of the U.S. government imposing a freeze on American bank withdrawals.
On May 7, an interview with Bloomberg Markets highlighted that more decline in the M2 money supply, which partly tracks money in liquid checking accounts, could lead to the U.S. government preventing citizens from withdrawing from the banking system.
In both interviews, as for where Americans can keep their capital amid the uncertainty, Hendry asks that they place it in the U.S. treasuries and potentially bitcoin.
He mentioned that he would consider bitcoin an asset class that might trade three or four times higher in the coming five years. He also noted that no other asset class could make that determination.
