At the moment, according to the CEO of Bitfury, we are experiencing an extreme tightening of financial policy. “Under these circumstances, traders do not see Bitcoin as an effective hedge against inflation. Therefore, the BTC price is likely to remain low in the short term“, he continues.

In a short interview with CNBC on August 29th Brooks also criticized the SEC for its belligerent approach to the crypto industry. He thinks regulators should take their work seriously and offer appropriate guidance rather than going to court.

The fight against inflation

The US inflation rate is currently at 8.5%, down slightly from the recent 40-year high of 9.1% in July. However, this figure is still well above the target rate of 2%. Until recently, the widespread opinion in the cryptosphere was that deflationary assets, such as Bitcoin, would do well in such a highly inflationary environment.

However, in recent months this theory has been refuted. The Bitcoin price is now at $ 20,000- a decrease of 60% compared to August last year.

According to Brooks, the FED’s aggressive response to high inflation has cooled the market.

“We talked about Bitcoin as a possible inflation hedge. However, the more the market assumes that monetary policy will be tightened due to high inflation, the more people think that the FED will take aggressive measures to achieve its goals. That would tend to hurt Bitcoin more“, Brooks told CNBC.

With the increase in interest rates, the FED has been pursuing a policy of intensive financial tightening since the beginning of the year. At the beginning of 2022, we still had a zero interest rate. The FED raised interest rates by 0.25% in March, by 0.50% in May, by 0.75% in June and by 0.75% in July. Overall, interest rates have been raised by 2.25% since the beginning of the year.

Another reason for the supposedly weak performance of Bitcoin could be the type of inflation that the market is currently exposed to. According to Steven Lubka of Swan Bitcoin, BTC is performing well only in the face of inflation caused by the devaluation of currencies. In layman’s terms: when money is printed. At the moment, most of the inflation is caused by the disruption of the supply chain and the shortage of important raw materials, such as wheat and oil.

Criticism of the SEC

Although Brooks hasn’t exactly held back on the Fed and its economic policies, most of his anger seemed reserved for the Securities and Exchange Commission (SEC).

Brooks was especially outraged by the SEC’s approach to regulating the cryptosphere. This is not very action-oriented and has a lot to do with litigation. Bitcoin and the entire market would have suffered as a result.

“Creating regulations does not mean suing entrepreneurs. The SEC’s approach in recent years has been to not create rules in advance. Instead, they sued entrepreneurs after they started a project, founded a company or listed a token. Subsequently, the entrepreneurs should conclude from this which rules the SEC wants to see complied with. This is not correct and therefore should Congress and regulators will at some point seriously think about clear rules for the crypto world“, said Brooks.

Brooks’ words seem to echo those of Superintendent Adrienne A. Harris of the New York State Department of Financial Services (DFS). Harris, an accomplished politician, expressed her intention to work towards a more equitable crypto regulatory landscape. In June, she said: “We should create a transparent set of rules for this sector and move away from ’regulation by enforcement’.”

Should such an environment ever be created, Brooks would not be happy as the only member of the crypto community. For now, however, the guesswork continues.

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