A finance professor at the Wharton School of the University of Pennsylvania recently stated that Bitcoin was taking over. According to Jeremy Siegel, a finance professor at Wharton, Bitcoin could surpass the US dollar if the Fed does not take action. The professors made the bold claims during an appearance on CNBC Friday.
Details of the Interview
Siegel, a finance professor at Wharton School, urged the Federal Reserve to defend the US dollar. In his opinion, if inflation continues at its current rate, Bitcoin would take over. Professor Siegel is Russell E. Palmer Professor Emeritus of Finance at Wharton, his research is focused on financial markets, demographics, long-run asset returns, and macroeconomics.
Siegel was critical of the Fed during his interview. Recently, the Fed Chair indicated that the initial rate hike would be in March at 25 base points. According to Siegel, this was too little and the Fed should take more aggressive action. According to Siegel, this was “not a time for us to slow down.” He explained that the Fed had been wrong over the past year when it came to inflation. He noted that it would be a huge mistake for the Fed to slow down interest rate hikes due to the conflict in Ukraine.
In his opinion,
“The Fed has been very wrong and they are going to have to catch up and they really have to admit they’ve got to bite the bullet here.”
In his opinion, if the situation was reversed, the Fed would have to increase rates many more times than the market expected.
The professor discussed Bitcoin during the interview and noted that it was taking over. He said that he had noticed increased popularity in Bitcoin for some time. During an appearance on CNBC in January, the professor noted that Bitcoin had replaced gold as an inflation hedge for Millenials.
Jeremy noted that inflation hit its highest level in 40 years in 2021. During that year, Bitcoin rallied over 60% while gold slipped by 5% to see its worst years since 2015. He pointed to the downturn in gold prices as a sign that it may not rally in an inflationary environment as it did in the 70s.
Wharton and Bitcoin
Wharton, which is the business school of the University of Pennsylvania, has not been shy about discussing Bitcoin. The school already offers a blockchain class to its students. Those who wish to join this class can pay for it in Bitcoin, Ethereum, and USD Coin. It is the first time that an Ivy League college has accepted payment in crypto for classes.
While it is true many more people are turning to BTC as a hedge against inflation, it is unlikely that BTC could take over from the dollar since BTC itself is valued in USD. However, the professor is right about the growing view amongst Millenials that BTC is a hedge against inflation. While initially intended as a way to facilitate transactions, most people who hold BTC today use it as an investment.
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