William Quigley, Tether Co-founder, Says Fed Rate Cut May Boost Bitcoin
William Quigley, Co-Founder of Tether: FED Rate Cuts Could Spark Next Bitcoin Bull Run
William Quigley, co-founder of Tether, discusses how to interpret Federal Reserve communications and the challenges being faced with providing accurate economic data reporting.
Quigley talks about how to make sense of what the Federal Reserve says and the problems with how economic data is reported. Quigley explains to CCN why it’s important to get the unemployment numbers right and what those indicators communicate to interest rates and how people view the market using economic data.
Federal Reserve and Interest Rate Dynamics
Quigley’s analysis begins with an overview of the Federal Reserve’s interest rate decisions. He supports maintaining interest rates, basing his stance on current economic conditions and historical precedents. He explicitly stated:
“My view had been that most of the economic metrics in the United States were very good and therefore there’s nothing wrong with roughly five to even 6% interest rate in the United States, and historically that would have been considered, uh, perfectly reasonable.”
Quigley later speculated on the impact of rate cuts on the economy and cryptocurrency markets explaining how “rate cuts generally lead to recessions,” and noted that, “If history serves as a guide, we could see Bitcoin entering a new bull market phase post the rate adjustments.”
Quigley Says “It’s Like He’s Speaking in Riddles Sometimes”: Understanding Federal Reserve Communications
Quigley offered an interesting take on how to critique Jerome Powell’s communication style when he addresses the public, suggesting that the communication style chosen by the FED often leaves much room for market speculation due to its cryptic nature.
Quigley explained how “it’s like he’s speaking in riddles sometimes,” and “You try to find meaning in his carefully chosen words, hoping to glean some direction for the markets.” This strategic ambiguity, he argues, allows the Federal Reserve to maintain a level of flexibility in policy-making, which is power in managing a rapidly changing economic landscape.
Quigley tells a contrasting scenario on Jerome Powell alternative speech, “If he had said something like, ‘The U.S. economy has entered a difficult time very recently, jobs growth has stopped, home prices are starting to decline. There are a lot of people in the United States who are feeling anxious about their financial position.’ That would be setting it up for, these are the arguments why I need to cut rates.”
Powell Leaves Room for Maintaining or Potentially Increasing Rates
Quigley implies that a direct acknowledgment of economic downturns would naturally set the stage for a justification of lowering rates to stimulate economic activity. Conversely, by not making such explicit statements, Powell leaves room for maintaining or potentially increasing rates if economic conditions are perceived as stable or improving.
This strategic ambiguity allows the Federal Reserve to adjust their approach as new data becomes available, without committing prematurely to a course that might later prove to be premature or incorrect given evolving economic conditions.
Quigley notes that after the Federal Reserve takes action, they provide explanations for why they did what they did, rather than providing forecasts or promises ahead of time.
Challenges of Economic Data Accuracy
A significant portion of Quigley’s insights focuses on the reliability of economic data , particularly employment statistics. He pointedly highlighted the discrepancies in job creation numbers. “It turned out there were nearly a million jobs reported as created that were fictitious.”
“If you have a broken system that isn’t reporting things correctly, you would expect that it would be equally likely to report too few jobs as too many, but the bias in this reporting seemed to be always in inflating the number of jobs.”
Diversification as a Hedging Strategy
One practical approach to hedging that Quigley advocates for is diversification. He suggests reducing exposure to any single asset class or economic sector to mitigate potential losses.
“If you’re in the tech sector and you’re working in AI, you’re getting a salary that’s twice what you were getting before the AI boom. You are probably at some risk of a pullback,” he cautioned. By diversifying investments, individuals can protect themselves from sector-specific downturns, thereby spreading and reducing risk.
Quigley pointed out “hedging involves protecting your current positions,” defining hedging as a strategy designed to minimize risk due to adverse price movements in assets. He elaborates that the purpose of hedging is not necessarily to generate profit but to prevent losses
Housing Market and Recession
Quigley later explains that the stability of the housing market significantly cushions the economy against the full impact of a recession. He observed, “The stock market is at a record high. The housing market is down from its COVID highs but is above what it was during or at the beginning of the COVID crisis.
So I think most people who own property in the United States feel pretty good about their property.” This perception of sustained or increased asset value tends to mitigate the typical reduction in consumer spending usually seen in recessions.
Implications for Economic Policy
Based on this analysis, Quigley suggests that a large recession may be unlikely as long as the real estate market remains robust, and the perceived wealth from housing continues to make homeowners feel economically secure.
Quigley did hint that any forthcoming recession would likely be mild and short-lived under these conditions. “If we were to go into a recession, I think it would be very weak,” he conjectures, tying the health of the real estate market directly to broader economic resilience.
