The chief investment officer of Soros Fund Management, Dawn Fitzpatrick, thinks cryptocurrencies are at an "inflection point," leading her firm to make investments in crypto infrastructure, she said on a Bloomberg broadcast yesterday.
Speaking on Erik Schatzker's show "Front Row," Fitzpatrick said cryptocurrency infrastructure like exchanges, asset managers, custodians and tax reporting service providers were a "really interesting" category that her firm has been investing in.
"We've been making some investment into that infrastructure and we think that is at an inflection point," she said.
Soros Fund Management has some $27 billion in assets under management. It's ranked the second most successful hedge fund of all time by Institutional Investor, returning 44% annually since it was formed in 1970 by George Soros and Jim Rogers. In 2011 outside capital was returned to investors and it was restructured as a family office for George Soros.
Fitzpatrick said the global economy was at a "really interesting moment" caused by the rapid increase in U.S. money supply, leading to "real fear" that government-issued currencies would be debased. This, in turn, has rescued Bitcoin from being a "fringe asset," she said.
"When it comes to crypto generally, I think we are at a really important moment in time in that something like Bitcoin might have stayed a fringe asset, but for the fact that over the last 12 months we've increased money supply in the U.S. by 25% percent" she said. "There is a real fear of debasing fiat currencies."
Fitzpatrick elaborated that she didn't see Bitcoin as a currency, but rather a commodity that was easily stored and transferred. She also demonstrated knowledge of Bitcoin's supply schedule, noting that the rate of new supply halves every four years, an event known in Bitcoin as "the halving."
Bitcoin's features as a commodity that could potentially combat fiat debasement meant it has attracted demand away from gold, Fitzpatrick said.
"When you look at gold price action, in the context of a fairly robust inflation narrative, it's struggled getting traction, and I think it's because Bitcoin is taking away some of its buyer base," she said.
Fitzpatrick also highlighted the role of central bank digital currencies, and said she believed they would be deployed more quickly than most people expect. She said China's CBDC would probably be first to the market, and that it would likely be used for strategic geo-political reasons globally.
"I think there is some strategic reason why they are going to be a first mover, and I do think, from a geo-political perspective, they want to use that digital currency around the world," she said.
However, Fitzpatrick said CBDCs would be a threat to cryptocurrencies like Bitcoin, but not a lasting one.
"I think [CBDCs] are a real threat, but I think it will be temporary. I don't think they will be successful in permanently destabilising Bitcoin," she said.
When Schatzker asked Fitzpatrick whether she owned any Bitcoin herself, Fitzpatrick paused and then burst out laughing.
"I am not going to answer that," she said.