DoubleLine CEO Jeffrey Gundlach cautioned Tuesday against buying cryptocurrency in the current market because of where the Federal Reserve is in its interest-rate cycle. “I’d certainly not be a buyer today,” Gundlach said at the Future Proof wealth conference in Huntington Beach, Calif. He spoke as higher than expected consumer price index inflation readings Tuesday sent markets tumbling. Bitcoin’s price fell about 10% during selling that saw the Dow Jones Industrial Average fall 1,200 points for its worst loss of the year. Bitcoin prices previously rose above $67,000, peaking in November 2021, on the back of the Fed’s “free money” policies, he said. The U.S. central bank slashed borrowing costs to rock-bottom rates in the early days of the Covid-19 pandemic to help support the economy. Fed officials have been raising interest rates regularly and aggressively since March to tame stubbornly high inflation, and have signaled they will continue to do so until inflation readings improve. Bitcoin prices ballooned from around $5,000 in March 2020 to a high over $67,000 in November 2021. They’ve since plunged to just above $20,000. “I think you buy crypto when they do free money again,” Gundlach said of the Fed’s response to a future U.S. recession. “You need a true Fed pivot,” and not the “dreams” of a policy pivot, Gundlach said. Following the CPI report, traders in the fed funds futures market fully priced in a 0.75 percentage point interest rate hike at the Fed’s meeting next week. They also indicated a 32% probability for a full percentage point increase, something the Fed has never done since it began using the funds rate as the principal tool for monetary policy in the early 1990s.
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