Bitcoin’s thirsty ride: Through the trough with momentum

Bitcoin’s thirsty streak: through the trough with momentum

Even in a bull market there are dry spells. For the past two weeks, the cryptocurrency has been stuck in no-man’s land between 40,000 and 50,000. But don’t worry: We’ll get you through the lean period with bullish content.

Attentive readers of BTC-ECHO may already have noticed: Inflation is coming. Coupled with a declining supply of the cryptocurrency, the result is a bullish cocktail. Welcome to Opinion ECHO.

Inflation is a mutating beast

Arguably the most sensational piece came out of the UK this week. Investment firm Ruffer published its annual Ruffer Review on 1 March. This year’s edition was all about the threat of inflation. And from Bitcoin Billionaire the point of view of investment experts, inflation has always been a „T-Rex“ [sic!] just waiting to strike. But if Ruffer is to be believed, the unconventional monetary policy of the central banks threatens us with a completely „mutated velociraptor of inflation“ in 2021 (no joke, it really does say that).

The scenario described could therefore look as follows: First, growth returns to the economy with the COVID vaccine. It is true that the galloping consumer price index could still be contained with restrictive fiscal and monetary policy. But no one could resist the urge for ever looser monetary policy in the long run.

The deadly chomp [sic!] comes when inflation drives interest rates and stocks are downgraded as a result.
Ruffer Invest

And so the beast inflation mutates further and further until it becomes a full-blown Godzilla and munches the capital markets. What could help, who would have thought it: Bitcoin. This or something similar is the thesis of the investment professionals at Ruffer.

To infinity and much further

When it comes to Bitcoin price forecasts, the bulls are all over the place. Moon, Mars, what’s it going to be? It is obvious that as an exchange CEO you have a certain interest in the most bullish price developments possible. Now Bloomberg has also been able to elicit such an admission from Kraken CEO Jesse Powell.

We can only speculate, but if you measure [Bitcoin] in US dollars, you have to think [the value] is going to infinity. The true advocates will tell you that Bitcoin will go to the moon, go to Mars and eventually be the world currency.

What mind child is behind this is clear. Bitcoiners argue that fiat money like the US dollar (USD) is doomed to lose value due to the constant expansion of the money supply. Bitcoin, on the other hand, drives the diametric opposite. After all, as things stand, the inflation rate is halved every four years by the so-called halvings. So two opposing trends are evident here: Bitcoin is getting scarcer and fiat money is getting more abundant. Put this together and the value of one naturally grows when measured in the other. Strictly speaking, however, we do not know at all whether the US dollar is becoming less and less valuable or Bitcoin is becoming more and more valuable.

So if you think this trend through to the end, you will eventually „charge for goods and services in Bitcoin“, says Powell. Welcome to the Bitcoin Standard.