© Dan Kitwood/Getty Images A visual representation of the digital cryptocurrency bitcoin sits alongside a U.S. dollar, on December 7, 2017. The price of bitcoin tanked to under $6,000 in the early hours of Tuesday, falling to a near low for the year as cryptocurrencies across the board suffered drops in value.A major crypto trader has claimed that the value of Bitcoin will go to "infinity" and eventually become the world's currency.
"Of course, you know, we can only speculate," Jesse Powell, CEO of the San Francisco-based cryptocurrency trading exchange Kraken, told Bloomberg TV Thursday, "but when we measure it in terms of dollars, you have to think it's going to infinity."
He claims the U.S. dollar is in trouble, and Bitcoin is positioned to become the new standard of value.
"This national currency's only 50 years old, it's already showing extreme signs of weakness," Powell said, "and pretty soon I think people are going to start measuring the price of things in Bitcoin."
The first Federal Reserve notes were issued in 1913 after the creation of the Federal Reserve System. Prior to 1971, the notes were theoretically backed by gold held by the U.S. Treasury.
But the number of dollars in circulation eventually exceeded the value of the nation's gold reserves. President Richard Nixon abandoned the gold standard 50 years ago and created a fiat currency.
That meant paper dollars weren't backed by hard assets such as gold or silver but only by the government's declaration that Federal Reserve notes were legal tender.
The U.S. dollar, British pound, euro and most modern paper bills are fiat currencies. Their value is determined by supply and demand and the stability of the government issuing the bills.
Bitcoin bulls believe massive government spending and the growing national debt will destroy the value of the dollar, leading to inflation and ending the dollar's status as the world's reserve currency.
But proponents of Modern Monetary Theory counter that sovereign nations like the United States and the United Kingdom, which tax, borrow and spend in a fiat currency controlled by the government, aren't constrained by revenue because money can be printed as needed to cover spending.
The U.S. national debt now totals about $28 trillion, a figure Bitcoin proponents cite when questioning the future of the dollar, because it's not clear how the money will be repaid.
© Graeme Jennings-Pool/Getty Senator Mitt Romney (R-Utah) pointed out that Republicans were "spending massively" during the Trump administration, suggesting it appears disingenuous to now raise concerns about the national debt. In this photo, Romney speaks at the confirmation hearing of the Senate Foreign Relations Committee on Capitol Hill January 19 in Washington, D.C. Graeme Jennings-Pool/GettyHowever, cryptocurrency skeptics believe Bitcoin is an investment bubble akin to Holland's tulip mania in the early 1600s and eventually will collapse.
Skeptics argue that Bitcoin, a decentralized global system where value is stored electronically on a blockchain ledger without a physical presence or backing by a government, represents nothing more than an investor's hope for future price appreciation.
Bitcoin critics argue that like the mythical kraken of Scandinavian folklore that terrorized sailors near Norway and Greenland, the cryptocurrency will eventually eat its investors.
Nevertheless, Powell, who named his company after the legendary sea monster, believes Bitcoin's future is unlimited.
"I think true believers will tell you it's going all the way to the moon, to Mars, and eventually it'll be the world's currency," Powell said. "The people that are believers in Bitcoin see it's going to replace all of the world's currency, so that basically means whatever the market cap of the dollar is, the euro — all of that combined is what Bitcoin could be worth."
He said Bitcoin will replace gold as a store of value.
NEW YORK, NEW YORK - FEBRUARY 08: A bitcoin ATM is seen inside the Big Apple Tobacco Shop on February 08, 2021 in New York City. Tesla announced on Monday that it purchased $1.5 billion worth of bitcoin. The car company also announced that it will start accepting payments in bitcoin in exchange for its products which include their electric cars and solar panels. (Photo by Michael M. Santiago/Getty Images)"In the near term, people see (Bitcoin) surpassing gold as a store of value, so I think a million dollars as a price target within the next 10 years is very reasonable," Powell said.
In midday trading Thursday, Bitcoin fetched $49,940.69 after opening at $51,058.36, CoinDesk reported.
On Wednesday, Bitcoin climbed above $50,000 for the first time in six days. It has gained 69.04% so far this year. The all-time high is $58,332.36.
Market PulseThe Federal Home Loan Mortgage Corporation, often called Freddie Mac, said the typical rate on a 30-year-fixed-rate mortgage rose to 3.02%. The rate has increased five weeks in a row and Thursday is the first time it has topped 3% since July.
Mortgage rates fell sharply during the COVID-19 pandemic, creating a surge in lending and refinancing. They dipped to 2.98% last July, the first time borrowers paid less than 3% in about 50 years.
© Free-Photos/pixabay.com The average mortgage debt Americans retire with is above $77,000. Free-Photos/pixabay.comMortgage rates typically track the yield on the 10-year U.S. Treasury note, which has been rising recently.
In general, Treasury yields rise when the economy strengthens and investors typically allocate more money to stocks than bonds, which are more secure but offer lower returns. Bond yields rise as prices decline.
Freddie Mac is a stockholder-owned government-sponsored enterprise created by Congress in 1970 to assure the flow of money to mortgage lenders to encourage homeownership by middle-income Americans.
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