Bitcoin To See Major Boost During Coming Dollar Inflation
Bitcoin is an asset unlike anything else. It can be used as a currency for transactions like the dollar and has been pitched as someday replacing fiat currencies as the global reserve currency.
However, the asset also shares many attributes that are more akin to a precious metal like gold than a currency like the dollar.
Related Reading | How Bitcoin Is the Answer to The Questions Everyone Should Be Asking Ahead of Crisis
Fiat currencies can be printed at whim, as we’ve seen recently as the government scrambles to ease the impact of any lasting economic recession that follows the coronavirus pandemic.
Because Bitcoin, like gold and other precious metals, has a limit to its supply, the asset has a deflationary attribute that is completely unlike fiat currencies.
It’s this attribute that presents a wildly bullish case for the first-ever cryptocurrency designed by Satoshi Nakamoto in the face of increasing government overspending, according to one well-known economist, Alex Kruger.
The same people ardently criticize governments’ economic aid packages. Such an irony, as those packages are bullish for the price of bitcoin in both the short and long term. In theory, the best case scenario for $BTC is a world were governments overspend and lose control.
— Alex Krüger (@krugermacro) March 17, 2020
Although gold has been crashing alongside the stock market and cryptocurrencies like Bitcoin, the asset performed this way during the last recession as investors sold everything under the sun to prepare for the worst.
After the initial decline, gold went on to set a new record high, not only due to investors moving capital to precious metals as a slight of safety, but also due to the value of the dollar diminishing through inflation.
How The Cryptocurrency Could Come into Global Favor
Bitcoin like many other assets are paired against USD to determine their value. But as the value of the dollar falls relative to other assets, Bitcoin’s true value could shine in the days ahead.
Even cryptocurrency trading platform BitMEX has released a blog recently entitled “inflation is coming.”
Related Reading | Is the Coronavirus The Black Swan Event That Crushes Cryptocurrency?
The research branch of the margin trading cryptocurrency exchange claims that “in this environment, Bitcoin could be given its biggest opportunity, in its short lifetime.”
The firm chalks it up to an economic regime change where all markets are set loose with no significant anchor, meaning that the dominance and supremacy of the dollar could soon fail, giving rise to Bitcoin as the global reserve currency it has always had the potential to become.
Featured image from Shutterstock