Stanley Druckenmiller believes that people would shift to crypto if central banks seemed unreliable

Cryptocurrency could resurface, according to billionaire investor and Duquesne Family Office CEO Stanley Druckenmiller, as people start to doubt their central banks.

On Wednesday, during an interview with CNBC Delivering Alpha Conference, the billionaire started by decrying the Federal Reserve’s “radical monetary policies” in 2021. 

 “I was just incredibly frustrated with what to me looked like a Fed that was just taking unbelievable risks,” he said.

He continued, saying that the activities by central banks including Fed contributed to the collapse of the “wildest raging asset bubble ever seen,” stressing that such bubbles typically lead to economic crashes. Because it was “not part of their mandate,” the Fed chose not to handle such asset inflation at the time.

Bitcoin surged in 2020 and 2021, but since the Fed started tightening monetary policy this year to combat inflation, it has plummeted back to late 2020 lows. In June, the annual CPI reached a high of 9.1%, but as of August, it had fallen to 8.3%. The benchmark interest rate set by the central bank is currently just over 3%.

While Druckenmiller is pleased that the Fed is now actively tackling inflation, he doesn’t believe they will be able to stop possible recession by the end of 2023. As a result, he continues to have doubts about the Fed’s ability to reduce inflation without reversing direction. He stated:

“Let’s see what happens if we get a hard landing. You have to slay the dragon.  And the chair is right. You’re probably going to have some pain.”

On the other hand, Bitfury CEO Brian Brooks believes that the Fed’s approach to inflation is hurting the crypto industry, as TheCoinRise reported.

People could lose trust in Central Banks

As the Fed continues to tighten, Druckenmiller made it clear that he is avoiding assets, including Bitcoin and other cryptocurrencies. However, he believes that there will be a long-term case for cryptocurrency to increase if central banks begin to change their positions, much as the Bank of England did on Wednesday.

“I could see cryptocurrency having a big role in a Renaissance because people just aren’t going to trust the central banks,” he stated. 

As the Bank of England (BOE) recently decided to temporarily acquire long-term UK government bonds, former BitMEX CEO Arthur Hayes referred to Bitcoin as the “cure” for yield curve control (YCC), as TheCoinRise reported.