Senator Elizabeth Warren (D-MA) joins CNBC’s “Squawk Box” team to discuss regulating the crypto market and why she’s calling for protections. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi
Sen. Elizabeth Warren told CNBC on Wednesday she’s skeptical that bitcoin will prove to be a reliable hedge against inflation over the long run, a key reason some investors choose to own it.
“People can make their own investment decisions, but to do that somehow assumes two things. One is that what’s happening with bitcoin or any other cryptocurrency is somehow going to be divorced from what’s happening elsewhere in the economy,” the Massachusetts Democrat, a frequent Wall Street and crypto critic, said on “Squawk Box.”
The second assumption, according to Warren, is “crypto coins are not going to have their own inflationary pressures.” She countered such a notion, saying inflation “may come from a different source than what happens with dollars, but look at what’s happened in the high volatility in the price of these things.”
“The idea that they’re somehow a protection or a hedge, I don’t think that’s going to be borne out over time,” she added.
Many crypto bulls believe bitcoin represents a durable, long-term store of value, providing protection against what they see as too much government fiscal spending on top ultra-accommodative monetary policies by global central banks causing problematically high inflation. Their reasoning is that eventual supply of bitcoin is capped at 21 million tokens. Currently, the world’s largest cryptocurrency by market value has 18.77 million tokens in circulation.
New bitcoins come into the market when so-called miners use high-powered computers to verify transactions across the blockchain, a decentralized digital ledger. That reward is systematically reduced roughly every four years in a technical event known as the “halving.” The most recent occurred in May 2023.
Many critics, Warren among them, point to bitcoin’s penchant for wild price swings and believe it undercuts the premise of bitcoin as a store of value.
In recent months, inflation concerns have permeated across the U.S. and other parts of the world as economies pick up steam from pandemic-related slowdowns. Against that backdrop, however, bitcoin tumbled from its all-time high near $65,000 in mid-April to below $30,000 this summer. As of Wednesday morning, bitcoin traded back near $40,000.
Mike Novogratz, founder and CEO of crypto financial services firm Galaxy Digital, told CNBC earlier Wednesday that he believes theories about bitcoin’s store-of-value potential cannot be shot down yet.
“Bitcoin is 13 years old, so we’re still very early in the adoption of these new technologies and these new assets. People are buying bitcoin because they have worries that our fiscal and monetary policy is out of control. So, yes, it’s a broader debasement-of-currency hedge. It’s a broader debasement-of-fiat-money hedge. That’s mostly an inflation hedge. It doesn’t mean it’s going to go tick for tick with every CPI number,” Novogratz said, referring to the consumer price index, a monthly inflation reading released by the U.S. Bureau of Labor Statistics.
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