Adam Back, inventor of Hashcoin (which is used in Bitcoin mining) and CEO of Blockstream, shared his thoughts on Bitcoin recently.
Back’s Sentiment
Even though the cryptocurrency market has dropped a lot from its past highs, Adam Back stays optimistic. With fear spreading and inflation at a 40-year high, Back repeated what he said last year: that Bitcoin ($BTC) would reach $100,000 by the end of the year. While it’s clear now that Back didn’t hit his prediction last time, BTC did spike to nearly $70,000 in November.
why not this year. once the defi contagion via WBTC is flushed out.
— Adam Back (@adam3us) June 16, 2022
Responding to a Tweet claiming that Bitcoin would still hit six figures during the next market cycle, Back said that he believes Bitcoin could actually hit $100,000 this year as the DeFi sector crumbles. Wrapped Bitcoin or WBTC is an Ethereum-based ERC-20 asset that represents BTC at a 1:1 ratio. The token allows BTC holders to participate in the Ethereum DeFi ecosystem. At the time of writing, there are around 280,000 WBTC in circulation.
everyone has their pet macro-views. my guess: stock market + US election season, moral hazard kicks up, QE ramps up again, rates drop again, money printer goes into over-drive. so the interest rate overhang falls off. and BTC decorrelates somewhere along the way once defi flushed
— Adam Back (@adam3us) June 16, 2022
Cryptoassets are a highly volatile unregulated investment product. Your capital is at risk.
Bitcoin’s Correlation with the Stock Market
Following Adan Back’s Bitcoin claims, another Twitter user asked if he thought the crypto market would decorrelate from the stock market. Back reinforced the fact that everyone has different views and he was simply making an educated guess. However, he went on to state that as the US election season nears the FED will likely ramp up their quantitate easing (buying long-term securities from the open market) efforts to curtail inflation. Back then said he thinks money printing will “go into overdrive” and Bitcoin would decorate somewhere along the whole process.
Many crypto believers are longing for the day Bitcoin decorrelates from the stock market. As things currently stand, Bitcoin is driven by the stock market which is influenced by the dollar index (DXY). This means, that for a crypto bull run to begin, the stock market must support the idea. Once the crypto and stock markets decorrelate from one another, Bitcoin is free to do as it pleases. Meaning, that we could see a crypto run-up during a stock market stagnation as investors look for inflation hedges.
Many crypto analysts have claimed that for Bitcoin to hit new all-time highs it must first decorrelate. While this reinforces Back’s sentiment, only time will tell how accurate his prediction will be.
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