Crypto strengthens in September on equity weakness

The global financial landscape has been experiencing significant shifts, with bonds showing weakness, equity markets facing challenges, and the rise of cryptocurrencies as potential hedges against monetary regime changes. Bitcoin has demonstrated resilience, up 7 percent against the U.S. dollar amidst a strengthening dollar and struggling equity markets. Rob Price, Founder & CIO of Sound Money Capital, joined CNBC Africa to delve deeper into these dynamics and explore the evolving interplay between bonds, the monetary regime, and the role of crypto in the current economic climate. Price highlighted the unusual weakening of global bond markets, particularly in the U.S., raising concerns about economic growth and disinflation risks. The breakdown in the correlation between economic growth, inflation, and bond markets signals a potential shift in the monetary regime. The decision to sanction Russian treasury assets by the U.S. government challenged the perception of U.S. treasuries as risk-free safe-haven assets, prompting a reassessment of the current monetary landscape. Discussing the role of crypto as a hedge against future monetary regime changes, Price emphasized Bitcoin's unique attributes as a non-state asset with quick settlement and counterparty-free nature. While acknowledging the volatility of cryptocurrencies, Price sees Bitcoin as a powerful asset with the potential to play a significant role in a fluctuating monetary regime. In addition to Bitcoin, stablecoins have emerged as a key player in the crypto space, presenting both opportunities and risks for emerging market currencies. Price highlighted the role of stablecoins in supporting the U.S. dollar, providing a convenient way for people to access and hold dollars globally. While stablecoins like Circle's fully reserved back stablecoins offer a secure avenue for leveraging the U.S. dollar, Price cautioned against risks associated with certain stablecoin issuances, such as Terra Luna. Looking ahead, Price foresees increased adoption of the U.S. dollar through stablecoins, particularly among individuals in countries where accessing traditional U.S. dollar bank accounts is challenging. While crypto poses threats to fiat currencies in the long run, stablecoins currently serve to bolster the U.S. dollar's global position and offer a more accessible alternative for holding stable assets. As the financial landscape continues to evolve, the interplay between bonds, cryptocurrencies, and stablecoins will shape investment strategies and risk management approaches in the ever-changing monetary regime.