Four Big Reasons to be Bullish on Bitcoin
It’s been a dismal few last weeks in the crypto and legacy markets, with the world economy falling into its worst conditions since the financial crisis of 2008/2009. As of Monday morning, the stock market was down 2%, remaining in relative freefall while the U.S. Congress worked to hammer out the final details on a stimulus package aimed at relieving businesses with emergency loans and individuals with cash payments. The status of the stimulus bill remains up in the air as Democrats and Republicans are as of yet unable to come to an agreement on their contents.
Regardless of problems with the government, Wall Street and the larger economy, the crypto markets have held up relatively well, even if still remaining in a rather severe slump. Bitcoin (BTC) is up 25%, Ethereum (ETH) up 17%, and Ripple (XRP) up 10%. The question of whether or not BTC can remain a “store of value” in trying economic times will be answered this week as traditional markets are likely to continue to falter. If bitcoin can remain relatively stable (or go up) while the stock market goes down, it will indicate that it has once again decoupled from traditional assets, buoyed by the strength of its own fundamentals.
Despite the increasing presence of a ravaging virus that has reached the level of pandemic, economic woes that appear to be a once-in-a-generation event and over one billion people being locked down and forced to separate themselves from others, there are still a few bright spots to look forward to as a bitcoin holder or investor, and we go through them one-by-one for you now:
- The case for bitcoin as a form of payment shines. Because people are being isolated, unable to converge en masse or travel to do their shopping, the ability to use cash as normal is ruled out in some instances. Instead, bitcoin and other cryptos can be used as an alternative form of digital payment. Sending bitcoin requires no face-to-face interaction. Only an internet connection and computer or mobile device is required. Additionally, paper money and metal coins are known to be potential carriers of infectious disease, which makes the usage of cryptocurrency as a method of payment all the more attractive. Some countries have even gone so far as to ban the use of cash for commercial and retail transactions until coronavirus fears subside.
My 77 year old mother ordered groceries online for the first time yesterday. “I tried tipping with cash but he don’t want cash! Cash is dirty! And I don’t want cash either!” If there was a tipping point, I think we’re well past it. #cashisdirty Stay safe, friends. 👏🚿 #bitcoin
— ᴍᴀᴛᴛ ᴋᴀɴᴇ 🎨 (@MattKaneArtist) March 21, 2020
- Bitcoin remains a deflationary asset. Earlier today, the U.S. Federal Reserve announced that they would continue purchasing assets with no limits, in effect suggesting they will create an unlimited supply of money. This is in addition to $700 billion already allocated to buy treasury bonds and mortgage-backed securities as announced last week. Though deemed necessary now to avoid economic ruin on a potentially global scale, this will eventually result in massive inflation, and cause other countries to race to print their own money in order to keep up with the dollar. This means that prices for goods, services and real estate will eventually skyrocket. As the number of bitcoin that can ever be mined remains at a mathematically-set 21 million, BTC provides a good hedge against inflationary assets like the dollar and other currencies — now more so than ever before.
The Federal Reserve says there is an “INFINITE AMOUNT OF CASH”
This is quite literally the reason bitcoin was created. pic.twitter.com/JTE9TVoSr0
— Vis (@Vis_in_numeris) March 23, 2020
- Bitcoin is currently on sale. BTC prices were crushed because of the economic panic, but started to rebound over a week ago. The stock market cannot say the same. This means that while even though buying bitcoin may seem like a risky maneuver at the moment (and it is, to some degree), it seems to be holding its own. The basic requirements for being able to transact bitcoin, such as electricity and internet connectivity, remain largely unaffected by government measures to restrict travel and keep people in doors. To be in trying times without these utilities could potentially mean society breaking down completely as opposed to its current mere interruption. Thus, internet is more-or-less now an essential service along with electricity, meaning its infrastructure will be protected and maintained during this crisis. This means that bitcoin can still be used and transacted as normal, and demand for it will likely increase in the near future.
All the stocks that “blew up before I could buy” are on sale again..
But you got the balls to buy?
— Millstoic (@millstoic) March 16, 2020
- Bitcoin reward halving is only 50 days away. As coded in its original design by Satoshi Nakamoto, the total reward of BTC mined in every 10-minute block is cut in half every 210,000 blocks, or roughly every 4 years. The first halving took place in 2012, the second in 2016, and the third will be sometime on May 10th of this year. This is a notable occasion because historically the price of bitcoin has risen sharply in the months following the halving. Having less newly “minted” bitcoin floating into circulation decreases its rate of inflation, which effectively reaches 0% per year by 2030. Less bitcoin in circulation – accompanied by a traditionally higher demand due to increasing worldwide adoption – leads to higher bitcoin prices. If rates of adoption continue to increase as they have over the course of the last 10 years, the price of BTC could skyrocket well above previous all-time highs and even into the 6-digit range before the end of the year.
— molly (@molllliy) March 19, 2020
Regardless of how prices fluctuate around the globe, the fundamentals of bitcoin remain the same. It is still just a program based on math and code whose principles and core features cannot be altered by the whims of state governments or corporations. This makes it extraordinarily unique as an asset or a form of currency, and is why it will continue to shine in times of economic turmoil.
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