No one has a crystal ball to predict the future. With less than a month away from Bitcoin’s halving, will this event boost its price? How does this play out, with the coronavirus pandemic? As economists are forecasting a global recession, many believe that we are preparing for a financial reset. Deutsche Bank sees a digital payment transformation post-coronavirus. The majority in the crypto community believes that Bitcoin could survive a global financial crisis and thrive.
The pandemic is pushing governments to do two things: lockdowns and print money. Both of these things are changing basic habits and trust.
On one end, consumers moved from a “digital-often” world, to a “digital-mostly” world. To slow the spread of the virus, governments have imposed temporary closures to stores, bars, and venues, as well as putting a ban on large public gatherings and encouraging people to work from home. How we shop, bank, work, worship, entertain ourselves and stay connected with each other, is now entirely online.
The online retail industry has had considerable growth, in sales of consumer goods, especially in heavily-affected countries, such as the United States, Italy, Germany, and the United Kingdom. The coronavirus pandemic has resulted in a quantum leap in the growth of the connected economy. The longer we remain in lockdown mode, the more likely consumer habits will change, and online will become a bigger part of our daily routine, going forward.
The other hand, governments are trying to claw their way out of the coming recession, with a massive stimulus packages.
The US Federal Reserve is doing everything it can. The FED’s measures, include an array of programs to help boost the economy hit by the coronavirus pandemic. It recently announced $2.3 trillion in aid to businesses and governments. The central bank will also buy investment-grade and junk bonds and will offer up to $600 billion in loans through its Main Street Lending Program to SMBs hit by the sudden economic halt. The UK government decided to pay for 80% of the wages in the country. EU finance ministers have approved €500 billion in stimulus measures designed to cushion the blow to their economies from the coronavirus pandemic.
“Extraordinary times require extraordinary action,” Christine Lagarde, the president of the European Central Bank, said last week via Twitter. “There are no limits to our commitment to the euro.”
People everywhere are losing their jobs, and their faith in governments. People are loosing their faith in the money system.
Unemployment in the US reached 6.6 million in a week. Throwing money at businesses is not the solution. I don’t know if government interventions will get economies moving again, but I do know with absolute certainty, that some businesses, banks, and governments will run out of money. In the meantime, as central banks worldwide print more money to keep things moving. The global money supply in circulation will continue to grow and Bitcoin will become more scarce. Infinite growth is only a utopia.
With one month until the third halving in Bitcoin’s history, the daily creation of new Bitcoins will decrease from 1800 to 900. The inflation of the Bitcoin supply will thus drop below 2%, to 1.8%. One of the greatest strengths of Bitcoin is its scarcity. The total supply of Bitcoin will forever remain limited to 21 million coins. It’s not like the U.S. dollar and the other fiat currencies. If you buy a Bitcoin today, you can be sure it will still be equal to one Bitcoin in 10, 50 or 100 years from now. .
What’s the future of Bitcoin post-COVID-19? Will people want dollars or BTC?
Well Bitcoin could get bigger, a lot bigger or things just go back to business as usual. Governments printing money to cushion the blow from the coronavirus pandemic, could make people flock to Bitcoin. Also, geographical boundaries will stop making much sense, which will spur the adoption of a frictionless cryptocurrency.
Bitcoin was created in the midst of the 2008 financial crash and has shown that it could be a possible alternative to central bank-controlled debt-based economy. It is a borderless and permissionless alternative, that is going to be in high demand in the post-coronavirus world. While it has not been battle-tested, it has shown, that unlike the rest of the market, it can survive without bailouts.
History suggests every time there is halving Bitcoin price goes up, The halving which is about to occur, is a crucial point for a new rise of Bitcoin (BTC) and a potential surge that will match its all-time high or even more.
Ilias Louis Hatzis is the Founder at Mercato Blockchain Corporation AG and a weekly columnist at DailyFintech.com.
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