Bitcoin down at $11k, cryptos will still outperform stocks in upcoming recession - Hex Founder Richard Heart

Bitcoin is down 65 percent from its all-time high of $68,990. In June, it briefly dropped below $18,000, implying a 75 percent drop from its all-time high.

Last year when he appeared on Kitco News, Hex founder Richard Heart predicted an 85 percent drop in the price of Bitcoin.

“At my last appearance here, I said that Bitcoin was down to $10K,” he said. “So far, Bitcoin is actually down 75 percent, 10 percent lower than my 85 percent target.”

Heart blamed institutions with large holdings in Bitcoin such as Celsius, MicroStrategy, and Three Arrows Capital for taking leveraged positions in the cryptocurrency, leading to the bubble.

“Michael Saylor took leverage and he dropped, I believe, 30 percent on his Bitcoin stack,” Heart said. “El Salvador’s government is down, ARKK’s investment is down. Everyone was devastated, except for me. I called the top on the deck. ”

Heart spoke with David Lin, Anchor and Producer at Kitco News.

https://www.youtube.com/watch?v=/vfE7UFDceqI

Bitcoin in recession

The National Bureau of Economic Research has not officially declared that the US is in recession. However, Thursday’s data from the Commerce Department showed that the US economy had experienced two-quarters of negative GDP growth, the standard definition of a recession.

The risk of a recession could potentially increase as the Federal Reserve raises interest rates.

Heart said that the outlook for Bitcoin is bearish during the recession.

“Bitcoin is directly correlated with the stock market,” he explained. “When interest rates go up, stocks go down. When stocks go down, Bitcoin goes down. When Bitcoin is down, most other cryptocurrencies are going down too.”

However, Heart cautions that relative price matters.

“If your investment is down 20 percent, but everything you want to buy is down 20 percent, you break even,” he said. “So what really matters is the ratio between what you hold on to versus what you want to buy… I don’t care about GDP growth or ‘not growth.’ How does that affect me? I care about the price of a Ferrari, the price of a Rolex. I don’t know how much a gallon of milk costs. I’m too rich to care anymore.”

Bitcoin Risk

In a recent podcast, Heart called the Bitcoin whale a “centralized bastard.” He uses Grayscale’s Bitcoin trust as an example.

“Grayscale holds 3 percent of all Bitcoins,” he said. “It is a centralized counterparty who can choose not to pay you.”

He added that exchanges that trade Bitcoin are vulnerable to hacking.

“Big hacks come from stupid people who don’t know why crypto was invented, and put their coins in other people’s wallets,” he explained.

Most crypto exchanges do not give clients custody of their own wallets, and only hold client coins in trust. This facilitates liquidity, but can compromise client accounts, as exchanges are vulnerable to hacking and fraud.

“Almost every exchange has been hacked at some point,” Heart said.

To find out what Heart thinks about Hex’s performance, and whether Bitcoin is an NSA creation, watch the video above.

Follow David Lin on Twitter: @davidlin_TV (https://twitter.com/davidlin_TV)

Follow Kitco News on Twitter: @KitcoNewsNOW (https://twitter.com/KitcoNewsNOW)

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