Category Archives: Bitcoin
Byrne Hobart, a CoinDesk columnist, is an investor, consultant and writer in New York. His newsletter, The Diff (diff.substack.com) covers inflection points in finance and technology.
Bitcoin (BTC) was designed for many reasons, but one of the most important was to be a safe-haven asset during times of financial distress. From the genesis blocks coinbase parameter (The Times 03/Jan/2009 Chancellor on brink of second bailout for banks) to today, bitcoins fans have treated it as something worth owning when the market goes crazy.
So its disappointing, to say the least, that after the fastest market rout in recent history, an asset built to be a safe haven dropped 31 percent while the S&P dropped by a quarter. The daily correlation between the S&P and bitcoin went from slightly negative in February to 0.6 in March. Bitcoin barely responded to the Federal Reserve cutting rates to zero, and shrugged off other monetary interventions.
This is painful to anyone who owns bitcoin, especially to anyone who bought it as a hedge against exactly this kind of sell-off, and exactly this kind of central bank response. The money printer went brrr, and yet the store-of-value lost value.
When we talk about safe-haven assets, were really talking about three different kinds of assets, for three kinds of scenarios:
Safer versions of risky bets, of the sort youd invest in to hedge against a mild recession. These might include less-levered companies in a given industry, high-margin companies, corporate bonds rather than equities or any investment in a consumer staples company. When the economy shrinks, its bad news for companies in the champagne and luxury hotel business, but doesnt really dent sales of toothpaste and canned food.
Assets people borrow during good times: Yen and U.S. Treasurys are classic safe assets, in part because investors borrow them to make other bets. If you buy a 10-year corporate bond, youre making a bet on the creditworthiness of the company, and a bet on interest rates. Most of the people who are good at credit analysis are not experts in predicting the future course of monetary policy, so many of them buy the corporate bonds and bet against Treasurys of the same maturity to control their interest rate risk.
Its not the safe haven for this particular kind of crisis.
The yen is a similar case: Since yen rates have been so low for so long, a classic forex trade is to borrow yen and invest in a currency with higher rates. In both cases, when the trade unwinds when you sell your corporate bond or close out your bet on the Turkish lira or the South African rand, you end up buying the safe asset. Anything boring and borrowable goes up in price in response to bad news.
Things you want to own if the world is about to end. The best way to illustrate this is with a story: The financier Felix Rohatyn grew up in France in the 1930s. When Germany invaded, his family fled they had enough time to pack their bags, but they lost almost everything. He recalled his parents putting gold coins in tubes of toothpaste before leaving. Everything else they owned, they left behind. If youre living through a moment thats going to be in the history books, the only assets you can take with you are the ones in your head or the ones you can smuggle out. (A USB drive, conveniently, fits into a variety of toiletry containers.)
One interpretation of bitcoins price performance during the COVID-19 crisis is that it wasnt such a safe haven after all. But another is that its not the safe haven for this particular kind of crisis. The math of epidemics and immunity is such that, however bad they are, they eventually burn themselves out given a low mutation rate. Once the percentage of the population that has been infected is greater than 1 / R0, cases begin to fall even in the absence of countermeasures. With a case fatality rate of 2 percent, thats an extraordinarily painful process to go through, and it ends up being a disaster for humanity on a historic scale.
An intense disaster, but not one that lasts forever. The 1957-58 flu pandemic may have led to the sharpest postwar recession in U.S. history (at least as of Q4 2019), but the subsequent recovery was equally swift.
Right now, thats how most investors are thinking. Whether they think COVID-19 is overblown or underblown, they still think of it as a temporary problem from which well recover in short order. In fact, the very bailouts that Satoshi referenced in the Genesis block point to an argument in favor of the recovery consensus. Conventional wisdom among investors and policymakers today is the government didnt react fast enough in 2008 to forestall a deflationary spiral. This time around, central banks are moving fast to supply cheap capital to financial institutions. In that scenario, governments and economies dont collapse, and nobody has to flee their home hours ahead of disaster.
They do, however, need to scramble for dollars to service debts, so theyll sell anything stocks, bonds, real estate, crypto and convert it into an asset they can use to pay the bills.
Bitcoins drop doesnt disprove the safe haven argument. It just shows us bitcoin is designed to be a safe haven from a worse storm.
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Major altcoins have seen their Twitter presence greatly reduced in the wake of the recent cryptocurrency market crash. According to data from Bitinfocharts, major altcoins such as Ethereum, Litecoin, and XRP now find their Twitter mentions nearing two and even three-year lows.
Meanwhile, Bitcoins Twitter presence doubled in the first three months of 2020, though its tweet count remains a long way off of its 2017 all-time high.
Earlier this week, on March 21st, tweets bearing the hashtag #XRP numbered 2,542. Thats a 60% drop since January 2020 alone, when XRP tweets ranged between 6,000 and 7,000.
The last time XRPs daily tweet count fell as low as 2,500 was in July 2018, almost 21 months ago.
XRPs all-time high Twitter surge didnt come during the 2017-2018 bull run, unlike most other coins. Instead, the peak of XRP Twitter engagement to date remains September 21st, 2018, when XRP was tweeted out 20,000 times according to Bitinfocharts.
As readers may recall, that date coincides with the first whispers regarding the then-rumoured launch of Ripple Labs xRapid - an XRP-based payment solution for financial institutions. Boosted by the much anticipated product launch, the price of XRP almost tripled in the week leading up to September 21st.
Litecoin reverts to 2 year tweet low
When daily Litecoin tweets fell as low as 344 earlier this month, it was the lowest Twitter engagement witnessed on behalf of Litecoin since March 2017.
That was the month in which Litecoin began its ascension leading up to its 2018 bull run. Between March and May of 2017 alone, the price of LTC increased ten times over, from $3 to $30.
From there, both the coins price and Twitter engagement continued climbing up and up. Remarkably, Litecoins return to the Twitter doldrums coincides with its fall back to the aforementioned $30 range.
Currently, Litecoin tweets currently number just 1.3% of their previous all-time high of 31,000.
Ethereum tweets down 95% from peak
Following a similar trend, Ethereums Twitter presence is at one of its lowest ebbs in over three years. Currently numbering around 2,500, Ethereums tweet-count has only sunk this low once in the past three years - that being New Years Day of 2020.
Barring that dip, the last time ETHs Twitter engagement fell so low was February of 2017. That was also the month in which ETH began a 60-day, 5x increase which carried the coin price from $10 to $50.
From December 2017s peak of 51,000 tweets in one 24-hour period, Ethereums Tweet-count has fallen over 95%.
Bitcoins Twitter engagement on March 26th amounted to 24,722 tweets. Thats a substantial drop from December 2017s peak of 155,000, but unlike most altcoins, Bitcoin has shown a resurgent Twitter trend in 2020.
After recording as little as 12,000 tweets back in January of this year, Bitcoin tweets have since more than doubled.
Searching for reasons why, one might assume that Bitcoins lesser drop in value compared to most altcoins has something to do with it. After all, social media engagement surrounding cryptocurrencies tends to follow price.
However, another cause could be the uncertainty surrounding the coronavirus, which reignited discussion surrounding Bitcoins value as a safe-haven asset.
Originally posted here:
Bitcoin Ascends on Twitter While Major Altcoins Hit Multi-Year Lows - Cointelegraph
The number of retail investors registering for an account with Japanese cryptocurrency exchange bitbank spiked by 40% in the week after the Bitcoin bloodbath.
The March 12 meltdown saw the price of Bitcoin (BTC) drop to a new 2020 low at $3,775. An official blog post by bitbank market analyst Yuya Hasegawa reveals that Bitcoin trade volume and account registrations both saw a significant surge in the wake of the crash.
Even the number of users going through KYC was above average on the day of the BTC downturn and the following couple of days.
Hasegawa contrasts the current situation to the period between November to December 2018 when the price of Bitcoin ground down. In that case, interest in the crypto market as a whole went down and bitbanks daily account registrations took a hit.
However, the price saw a 60% rebound while sustaining high volumes soon after the recent crash, which suggests to Hasegawa the intent to buy the dip is quite obvious:
When we take the increased daily account registrations into consideration, we can once again deduce that the current market recovery is driven largely by retail investors. Furthermore, as Forbes reports, this phenomenon is likely to be global, as Kraken, a San Francisco-based crypto exchange, experienced a steep increase in account registrations after March 12.
In just under 49 days, BTC will experience a halving where the block reward will decrease to 6.25 BTC. The last time this happened was in 2016.
Hasegawa writes that data from Google Trends suggests that investors in Japan and around the world are well aware of the possible price impact of the halving and will seize on any price drop to add to their holdings:
There is a good chance that, for this time around, there are many retail investors who want to buy Bitcoin or stack up their holdings at the cheapest price possible before its halving.
The chairman of the Federal Deposit Insurance Corporation (FDIC) has advised Americans not to withdraw all their money from banks to safeguard against market volatility in the stock market caused by the coronavirus pandemic. Bitcoiners have nothing to worry about; as long as users hold the keys to their Bitcoin, they are already their own bank.
Just yesterday, US Federal Reserve Chairman Jerome Powell said the US might already be in a recession. But McWilliams message reassures Americans that their money is safe at the banks. The last thing you should be doing is pulling your money out of the banks now, thinking that it's going to be safe for someplace else, she said.
You don't want to be walking around with large wads of cash and you certainly don't want to be hoarding cash in your mattress. It didn't pan out well for so many people, and I will tell you this; no depositor has lost a penny of their insured deposits since 1933 when the FDIC was created, she added.
The FDIC is a government corporation that provides insurance to depositors in US commercial banks and savings banks. It secures $250,000 per person, for each type of bank account, and has a $100 billion line of credit with the US Treasury.
Crypto enthusiasts responded to the news with glee; proof that the principle of not your keys; not your Bitcoin applies to the traditional financial world, too. If crypto is held by their owners, it is not possible for centralized organizations, like banks, to run down the reserves of cryptocurrencies.
The FDIC was created to indemnify Americans in the event of a bank run. Scaring people from taking self custody of their own money displays a terrifying incompetence, wrote one Bitcoiner on Twitter.
What most people still don't get is that the money you deposit in a bank is not yours anymore, it belongs to the bank. The is only 5 to 10% real physical cash available for withdrawal. The bank run has already begun which explains this intervention by the FDIC. Be your own bank! wrote another.
Of course, Bitcoins closest analog to bankscrypto exchangesare often far less insured than high street banks, and frequently misappropriate customer funds or become insolvent. Quadriga CX, Einstein Exchange, Binance and Mt. Gox are all examples of cryptocurrency exchanges that have lost user funds. The list of cryptocurrency exchanges that have had trouble producing user funds goes on: COSS, BT360, FCoin, Cryptopia, and many more.
Read the original:
Bitcoin community responds to FDIC warning on bank run - Decrypt
Binance Reveals Visa Debit Card in Push to Bring Bitcoin (BTC) and Crypto Payments Worldwide – The Daily Hodl
Binance is rolling out a new product that will allow crypto users to use digital assets to buy goods and services without needing to locate merchants that accept Bitcoin (BTC) and without having to exchange their cryptocurrencies into fiat.
In a press release, the leading global crypto exchange reveals the release of its own Visa-powered payment card which will be accepted by more than 46 million merchants worldwide.
Binance says users can fund the new Binance Card with Bitcoin or BNB token using the Binance Card App. Just like a regular debit card, the Binance Card automatically uses the balance on the card to settle payments.
The card costs $15. To pay, users have to transfer the equivalent amount in BNB or BTC from their crypto wallet to the cards balance. Binance will then process the order. The firm says it will not charge any monthly or annual fees.
The card is currently available in beta as a virtual card only. A physical card, due to roll out soon, will initially be released to the global exchanges users in Malaysia and Vietnam.
The company plans to introduce the card to all of its users around the world within the next few weeks.
You can register interest in Binance Card through the landing page, and we will notify you once the card becomes available in your region.
Binance reports that it has over 15,000,000users worldwide.
Featured Image: Shutterstock/spainter_vfx
See the original post here:
Binance Reveals Visa Debit Card in Push to Bring Bitcoin (BTC) and Crypto Payments Worldwide - The Daily Hodl
Appearing on NBCs Today show this morning, US Federal Reserve Chairman Jerome Powell said, We may well be in a recession. He ascribed the countrys economic downturn to the coronavirus, the global pandemic that has infected over half a million people and has billions on lockdown.
As the coronavirus started sweeping through the US, it battered the US economy and crashed global markets. Bitcoin was not exempt. At one point, the price of BTC sunk to a low of $4,100, its worst price since March 2019, before recently recovering to around $6,600 as stocks have ticked back up.
But if Bitcoin collapsed in sync with the rest of the market, how will it do if America sinks into a deep recession?
A recession constitutes two quarters of successive decline in gross domestic product (GDP).That looks likely in the US. A staggering 3.3 million US citizens filed for unemployment benefits last weeka record high. Late last night, a two trillion-dollar stimulus package to help the economy keep afloat during the crisis was approved by the US Senate and will move to the House of Representatives for a vote.
But Powell told NBC theres a difference between this recession and a normal recession: There is nothing fundamentally wrong with our economy. Quite the contrary. We are starting from a very strong position.
According to Pankaj Balani, CEO of Delta Exchange, the Bitcoin market is equally healthy. The key difference in this crisis, though, is the speed of price movement. Whatever happened in five months in the mortgage crisis happened in five days in the corona crisis. Hence, the recovery should also be a lot faster, he told Decrypt.
Though Bitcoin earlier this month fell along with global markets, Balani predicted that as markets settle we will see assets decouple from one another and prices will be driven by idiosyncratic risks instead of systemic risks.
Bitcoin may even benefit from a recession, said Balani. Central banks like the US Federal Reserve finance stimulus packages by increasing the monetary supply. This will put pressure on currencies and can turn out to be positive for Bitcoin prices in the medium to long term, he said.
Simon Peters, a market analyst at trading site eToro, agreed. He told Decrypt, Due to the Fed announcing unlimited [quantitative easing], investors could soon be looking to BTC as an inflation hedge against a depreciating dollar.
He added that investors are also less likely to sell Bitcoin because of the upcoming halving event. Its slated to occur sometime around the middle of Maywhereupon the supply of Bitcoins issued as mining rewards will halve, due to a feature hardcoded into the Bitcoin protocol. Some investors predict the halving to lead to a rise in the price of Bitcoin. The event theoretically should reduce selling pressure from miners, said Peters.
Theres another reason a US recession might not be bad for the crypto economy, noted Peters: The coronavirus originated in China, which has since contained the virus and is beginning to resume economic production. Much of Bitcoins hash power is concentrated in Chinaa staggering 54% of hash power is controlled by Chinese miners alone, according to a December 2019 report by CoinShares. Consequently, said Peters, We can expect mining operations, and in particular the network hashrate, to start picking up from the recent slump.
These conditions could in fact be a perfect storm for Bitcoin's next bull market, resulting in some positive moves at the end of this year and into 2021, he concluded.
But, in terms of the American economy as a whole, US President Donald Trump doesn't want to wait that long. Hes hoping the US economy can be humming back along by Easter. But as the countrys leading infectious disease expert, Dr. Anthony Fauci, told CNN, You dont make the timeline; the virus makes the timeline.
In the case of Bitcoin, the protocol makes the timeline.
Follow this link:
How would a US recession affect Bitcoin? - Decrypt
On March 24, Cardano (ADA) founder, Charles Hoskinson, streamed a YouTube video titled On Wikipedia, in which he berated Wikipedia for applying arbitrary commercial censorship against Cardano.
Censorship of cryptocurrency projects is as old as the industry itself. Back in 2010, even Satoshi Nakamoto was frustrated with Wikipedias editors for removing Bitcoins wiki entry several times.
After PayPal severed ties with WikiLeaks, one of Bitcoins supporters suggested that becoming the site's new source of donations would generate enough publicity to gain entry into Wikipedia. Satoshi strongly opposed WikiLeaks adoption of the cryptocurrency, but it was too late:
No, don't "bring it on". The project needs to grow gradually so the software can be strengthened along the way. I make this appeal to WikiLeaks not to try to use Bitcoin. Bitcoin is a small beta community in its infancy. You would not stand to get more than pocket change, and the heat you would bring would likely destroy us at this stage.
Hoskinson states that he does not know the rationale behind Wikipedias hostility towards his project, despite it being the most cited of all of the peer reviewed coins:
We don't know why there's hostility where coins like SpankChain can have an article on Wikipedia. A lot of other cryptocurrencies and top 15, top 20 apparently have articles and that's perfectly fine. But then we're not allowed to have an article for some reason, even though we've been mentioned by the U.S. Congress.
Cointelegraph could not find a Wikipedia article for SpankChain (SPANK). Other projects like Dogecoin (DOGE), GridCoin (GRC), and PotCoin (POT) do have one, however. Most of the top ten projects, including Bitcoin Cash (BCH), have one too.
Hoskinson confirmed to Cointelegraph that the censorship comes exclusively from Wikipedias English language editors, noting that there are Cardano wiki entries in German, Estonian, Italian, Japanese, Dutch, Portuguese, Romanian and Russian.
Crypto censorship has recently been on the rise. In Wikipedias case, it is an especially surprising move, considering that the site accepts Bitcoin to help fund its mission of providing a free online encyclopedia, created and edited by volunteers around the world
Johnson Xu is the Chief Analyst at TokenInsight, a token data and rating agency._____
The sharp market downturn in mid-March 2020 forced some Bitcoin (BTC) miners to switch off their mining rigs. As a result, the Bitcoin network hash rate plummeted to ~75.8 EH/s. After reaching its lowest recent point, down from its all-time high of ~136 EH/s, the network hash rate is currently hovering at ~100 EH/s.
Consequently, we have seen a fall of almost 16% in mining difficulty, resulting in the second-largest drop in history.As the price plummeted yet lower, the network has seen a surge on its mean block interval from roughly 10 minutes per block to 15 minutes per block before the scheduled network adjustment kicks in.
The MRI (miner's rolling inventory) provides valuable insights into how miners perceive the market.Prior to the market downturn (March 11, 2020), the MRI reflected the fact miners appeared conformable to sell, indicated by a >1 MRI. When the market stabilized, after bitcoin crashed to sub-USD 4,000 at its lowest ebb, the daily MRI dropped significantly to < 1.
That indicates a very different view from miners on the condition of the market, and means they are holding back on bitcoin and their inventories are growing (Bytetree, 2020). At the time of writing, the daily MRI is running at around 1 (or 100%).Miners are still comfortable selling into the market in the longer run, as demonstrated by the 1 week, 5 weeks and 12 weeks MRI ratios.
The recent market downturn has caused some miners to switch off their rigs, as indicated by the recent ~16% downward adjustment on network mining difficulty.
However, 1-week fees are slowly creeping up to 52-week fee levels, despite the recent market downturn. Rising fees reflect increasing network activity, which could well be a positive indicator for the bitcoin market.
The SOPR (Spend Output Profit Ratio) ratio, developed by Renato Shirakashi, is one of the many insightful indicators that help analysts gauge market participants sentiment and behavior.
This ratio dropped significantly to <1 during the recent market downturn, and backed up to near 1 when the market stabilized.
However, the ratios upward turn faces some difficulty in its quest to break the >1 mark strongly. This could be an indicator that market participants are waiting to hit the breakeven point before they sell.
Theoretical 24-hour attack costs have dropped significantly recently, and currently sit at USD 14 million. This does sound alarming, especially when we can see a large drop in 24-hour attack costs.
However, it is practically impossible to perform a 51% attack on the Bitcoin network, as an attacker cannot solicit enough hash power to perform such an attack, due to the following reasons:
All of the above is true unless we discover a direct channel, which could let an attacker to control 51% hash rate effectively. The risk of a 51% attack on the Bitcoin network is extremely low and such an operation is extremely difficult to realize.
As the COVID-19 pandemic continues to unfold with dire consequences across the globe, desperate measures to keep the economy afloat continue to be taken by world governments. Currently the most notable example is the U.S., which recently announced an unlimited quantitative easing program and also reached an agreement for a $2 trillion stimulus package.
The unlimited quantitative easing process will entail the Federal Reserve purchasing assets in the amounts needed to support smooth market functioning and after the announcement was made Bitcoin (BTC) price rallied almost 10% from $6,300 to $6,900.
At the moment, Bitcoin has dropped to $6,630 and crypto markets have remained fairly stable throughout the day.
Crypto market data. Source: Coin360
Gold and silver have also recovered after several days of losses. Gold price dropped by more than 12% in 10 days but has since recovered to the $1,620-$1,680 price range seen between February 20 and March 9.
SILVER USD/m2 chart. Source: TradingView
Meanwhile silver has hit its generational low against the US dollar when money supply adjusted, a figure to keep in mind while the Fed prints billions of dollars. In the last 3 days, silver has seen modest gains, surging from $12 to $14.5.
As the U.S. government sets out to spend billions of dollars this week, stock markets reacted positively and the S&P 500 rallied over 9% on March 24, the biggest daily surge since 2008. The Feds QE efforts may prop up stock prices for now but the long-term consequences will likely have a significant impact on the economy for years to come.
While stock markets are currently reclaiming some of the ground lost during the past two weeks, the worst may be yet to come as the total impact of the Coronavirus and its effects on the population and on the economy are not yet visible.
At the time of writing the number of newly confirmed cases is growing at an alarming rate. Just yesterday, in the U.S. the number of confirmed cases grew by 10,270 to a total of 54,453. At this rate, the total number of confirmed cases in the U.S. may soon overtake Chinas.
Cumulative total number of COVID-19 cases in the U.S. Source: CDC
As for Bitcoin price, it is showing stability and painting higher highs and lower lows on the daily time frame. It seems likely that Bitcoin will continue to hold its own as the dollar inflates, although its worth noting that today's difficulty adjustment may cause the digital asset to lose value as mining becomes cheaper.
BTC USD daily chart. Source: TradingView
To the surprise of many investors, precious metals had been falling alongside global equity markets which on March 9 saw their worst performance since the 2008 financial crisis. However, this isnt entirely new for gold or silver.
In 2008, safe-haven assets behaved similarly, dropping alongside stocks and rallying after the announcement of the Fed's quantitative easing program. For the time being, gold and silver seem to be back to providing security for traders and Bitcoin has been following the lead by holding its own in what could be its biggest test as a unique asset class so far.
The Feds unprecedented new measures highlight one of the primary value propositions of decentralized cryptocurrencies like Bitcoin, the issuance rate cannot be tampered with.
As the current global financial meltdown has demonstrated, precious metals also have their weaknesses. On March 23, three of the worlds largest gold refineries announced that they would stop production for at least a week in order to comply with requests by local authorities. How this will weigh on price is yet to be determined.
Bitcoin, on the other hand, operates on a decentralized system that ensures that no geo-specific event can alter its production. Unlike precious metals, Bitcoins system allows miners to leave and join the network without severely impacting the amount of Bitcoin mined.
Over the past month the U.S. Dollar has also seen steady gains throughout the crisis due to the market participants quick exit from stocks and other risk-on assets. So far DXY has risen 6.35% in March but it has fallen by nearly 1% since the Feds announcement of unlimited QE.
Coincidentally, Bitcoin is set to have its next halving event in April which will lower its issuance rate drop from 12.5 BTC to 6.25 BTC every ten minutes. This means the supply will increase less than 2% per year, and will drop to less than 1% after 2024, a rate which is similar to the average rate of increase of the gold supply.
As the Fed sets out to print an unlimited supply of dollars, Bitcoin is in a prime position to become the next ultimate store of value currency as its issuance rate remains relatively unaffected by the COVID-19 pandemic and the upcoming halving continues as programmed.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Originally posted here:
Feds Unlimited QE Places Spotlight on Bitcoin Store-of-Value Narrative - Cointelegraph
Theres no hiding the fact that Bitcoin, at least in terms of its price, has underperformed amid the ongoing crisis unfolding around the world, caused by the coronavirus shutdowns the worlds governments have implemented.
Since the February highs at $10,500, the cryptocurrency has fallen to $6,500, marking a loss of just under 40%.
Despite this, there are a number of prominent analysts who think that Bitcoins fundamentals will only strengthen through this crisis.In fact, in a recent analysis, long-time market veteran Dan Morehead went as far as to say that during this crisis, Bitcoin will come of age.
Over the past few weeks, the global economy has spiraled into chaos; amid the coronavirus outbreak, unemployment claims have skyrocketed to record levels, prominent investment firms are projecting potentially Great Depression-level GDP contractions, and the stock market has seen its fastest crash in history, losing over 30% in a matter of a few weeks.
Due to this, governments and central banks have been forced to respond with their most drastic measures available boosted unemployment benefits, tax holidays, free money for all citizens, trillions of dollars worth of quantitative easing, and negative interest rates are amongst the measures being taken by the worlds authorities to try and save the flagging economy.
According to Morehead, this trend towards unorthodox monetary and fiscal solutions will be astronomically bullish for Bitcoin and some other assets. As he wrote in his companys latest newsletter:
As governments increase the quantity of paper money, it takes more pieces of paper money to buy things that have fixed quantities, like stocks and real estate, above where they would settle absent an increase in the amount of money. I think they will do that. The corollary is theyll also inflate the price of other things, like gold, bitcoin, and other cryptocurrencies.
He added that with the government deficit in the trillions, it will have a positive impact on the price of things not quantitatively-easable stocks, real estate, cryptocurrency relative to the price of money. Said another way, the BTC/USD cross-currency rate will rise.
With the backdrop set for Bitcoin, Morehead concluded in his letter by remarking that the leading cryptocurrency will likely set a new price high in the next 12 months, adding that rapid growth that some bulls expect is not going to happen overnight.
This was echoed by Raoul Pal ex-head of Goldman Sachs equity derivatives business and the current CEO of Real Vision who told an interviewer that he thinks the price of Bitcoinwill rally to its $20,000 all-time high within the coming 12 to 18 months.
This interview was released shortly after he remarked that he is more bullish than ever on Bitcoin, remarking that theres a possibility that all trust in the entire system has been lost. This was presumably in reference to the worlds response to the outbreak of COVID-19, which has revealed clear insecurities in the fabric of society, from politics to finance.
As to why it will take around 12 months for Bitcoin to reach new highs, Morehead explained:
My best guess is that it will take institutional investors 23 months to triage their current portfolio issues. Another 36 months to research new opportunities like distressed debt, special situations, crypto, etc. Then, as they begin making allocations, those markets will really begin to rise.
Indeed, with the three primary asset classes stocks, bonds (rallied, then crashed hard), and commodities all underperforming in tandem in the crisis, investors may begin to seek alternatives, cryptocurrencies included.