In what seems like the perfect environment for the cypherpunk-created hyper-inflation-escape-pod that is Bitcoin, investors were delighted to see a second day of modest gains. The Bitcoin price is currently sitting stable at it’s highest level since the Black Thursday crash that sent it plummeting to lows not seen since early 2018. Even more exciting than the price action itself is the fact that today marks the first day where Bitcoin has decoupled from the S&P 500 in a significant way.
Is it the upcoming halvening, the dollar’s impending doom of hyperinflation, the fact the the network’s key metrics are looking better than ever, or something else that is causing the price to pump today? How high will it go? Ross Ulbricht thinks the price is going to $333 million – how far is that from the moon?
It’s the Halvening, Stupid.
Most Bitcoin investors believe that this predestined event is already priced in. For those unaware (and potentially living under a rock) the halvening is an event that occurs whenever 210,000 blocks are mined. This is likely to occur every four years, with the next halvening happening in about 18 days from the publishing of this article. The event is considered hugely bullish for Bitcoin as the last 2 halvenings were followed by extreme gains in the following months.
Hyperinflation is coming
The word “Trillion” is getting thrown around quite often these days, and investors who have been hoarding cash since the Coronavirus infected the world economy last month and starting to lose their taste for it. Could it be the unprecedented stimulus packages that the US is passing, or possibly the historically significant moves the ECB and other gatekeepers of what the masses consider to be ‘money’ are making.
Whenever we inject large quantities of money into the ecosystem, we end up devaluing the amount that is currently circulating. This is one of the largest benefits of Bitcoin.. it’s scarcity. There will only ever be 21 million Bitcoin, but the amount of, say, dollars for instance, can go from 10 trillion to 20 trillion in a matter of months – in fact, it just did.
This is why we’re experiencing such a surge in gold prices. There is only so much gold in the earth’s crust, so throughout history as more ‘money’ was created, gold always moved up in value. We see the same trend with real estate. Your parents always told you real estate was the best investment, and in a way that is true, but the truth is that real estate isn’t as good of an investment as cash is a bad one. The value of fiat currency is constantly moving down in value – this is why your grandparents were able to see a movie for a nickel. This is why $5 used to buy acres of land. Is stuff becoming more expensive, or is cash just becoming less valuable?
They literally can’t give away oil right now. Since the coronavirus shut everything down, oil producers have no idea what to do with the stuff. You can’t exactly turn off an oil rig so where to put the oil has actually become a huge issue.
The housing market is collapsing, tens of millions are filing for unemployment, yield curves and lions and tigers and bears, oh my!
Are investors starting to flock to Bitcoin because of it’s proven store of value characteristics, or is this just another bull trap? The next few days will determine the direction the grandfather of cryptocurrency (and likely the entire market) takes into the halving.