David Frum, a Bitcoin critic and the speechwriter for the former U.S. President George W. Bush, has tweeted that Bitcoin’s rising rally has been driven by low-interest rates. According to him, the leading cryptocurrency would eventually fall into a price crash when the interest rates will start rising.
David Frum Believes Low Interest Rates Fueling Bitcoin
In a Twitter thread, Frum accused the leading cryptocurrency with allegations ranging from Bitcoin’s contribution to carbon footprint to linking to a Fortune article that Bitcoin price is a big bet on the Greater Fool theory of value. He stated that out of all the pro-bitcoin arguments the worst one is the store against inflation.
Of all the pro-bitcoin arguments, surely the worst is: “Store against inflation.” Bitcoin speculative surge is driven by world historically low interest rates. How fast and deep does Bitcoin price crash when interest rates rise and opportunity cost of holding Bitcoin surges?
— David Frum (@davidfrum) February 21, 2021
Frum’s comments on the flagship cryptocurrency resulted in discussions surrounding the value proposition of Bitcoin. For instance Alex Gladstein, the chief strategy officer with the Human Rights Foundation (HRF), joined the conversation with Frum saying that BTC’s has a role to play in human rights issues. He previously said on the cryptocurrency:
Only 13% of humans live under a liberal democracy with a reserve currency. The other 7 billion+ live under authoritarianism or a weak currency. Bitcoin is a powerful tool for them.
The crypto community was quick to dismiss Frum’s allegations, each with their own interesting claims. For instance another Twitter joined the thread explaining the other likely outcome of rising interest rates:
“If interest rates rise, the corporate sector and the government will be insolvent. What do you think is more likely we bankrupt everything, or we print our way out?”
Bitcoin Continues Gaining Institutional Support
Despite the criticism from mainstream figures, the cryptocurrency still continues to gain support from institutional investors and large companies.
For instance, Elon Musk’s Tesla, recently amended its investment policy while revealing that it had bought BTC worth $1.5 billion. Meanwhile, data from bitcointreasuries.org, a site that tracks companies or institutions having exposure to BTC, revealed that over 1.3 million coins or 6% of the total circulating supply are held by large corporations.