safe haven - Pwim.Net

Bitcoin Safe Haven Status Under Fire Following US Federal Reserve Rate Cuts to Combat Coronavirus Disruption

Equity markets have been surging following the US Federal Reserve’s (Fed) announcement of an emergency rate cut to counter the economic disruption of the coronavirus.

The bitcoin price which had also been experiencing a recent bearish decline, also reacted to the news of a rate cut of half a percentage point from the Fed, with a sudden spike from $8400 to $8950.

The reaction of the bitcoin market to the first cut to key rates from the Federal Reserve since December 2008, during the global financial crisis, is being carefully observed by the crypto community and may eventually reveal the cryptocurrency’s true nature.

Bitcoin and Commodities

Is bitcoin a currency designed to facilitate commerce, or is it a commodity that has intrinsic value, which rises and falls according to supply and demand? This is a question that the crypto community has been asking for some time and the Federal Reserve’s rate cut could provide the answer.

By cutting rates the Federal Reserve will increase the supply of money in the global market, a welcomed move by businesses everywhere. The half a percentage rate cut effectively devalues the US dollar, the de facto global currency, thus it should put up the price of commodities such as gold as the supply of gold did not increase. This should in theory also apply to bitcoin as its supply is also fixed.

Chart: The Balance Source: St. Louis Fed

The Bitcoin price did react almost immediately to the Fed’s rate cuts, shooting up almost $200 only minutes after the announcement. The rise was short-lived and the price fell immediately beginning the current cycle of volatility.

BTC USDT 1-minute chart. Source: TradingView

It should be noted that the BTC price movements since the announcement have mirrored the traditional commodities and equities markets which also spiked before plunging 2 points. Gold itself did not see a bullish price reaction to the cut but there are still many reasons gold and bitcoin could climb higher from this point.

Bitcoin Safe Haven Hedge Questionable During Outbreak

VanEck recently outlined the case for institutional bitcoin investment in a report published on Jan. 29. According to the investment management firm, even a small amount of BTC allocation could improve a portfolio’s upside.

VanEck explained that BTC is not quite a currency but still has the potential to become one. The report also suggests Bitcoin bears the necessary features that could see it become a digital gold, but its future monetary value hinges heavily on how people’s perceptions of its value develop.

In a recent interview with Blockchain.News, Oleksandr Lutskevych, CEO and Founder of the CEX.IO Bitcoin exchange revealed that US investors have been looking for a bonafide store of value in bitcoin to hedge against the Federal Reserve’s quantitative easing. He noted similar sentiments in the UK during Brexit as citizens also invested heavily in bitcoin to hedge against a possible depreciation of the GBP.

As the coronavirus spread, global markets have been gripped by a ruthless sell-off, and Bitcoin has failed to serve as a store of value, which many believe should be its main use case. In fact, BTC performed worse than any traditional asset, shedding 15 per cent of its value in less than a week

Mike Novagratz, CEO of Galaxy Digital tried to shed some light on why bitcoin is failing as a safe haven in a tweet on March 1.

Novagratz wrote, “ How did BTC go from being a hedge against bad stuff to getting washed out and trading like a risk asset? When things go from bad, to very very bad like they did last week, investors take leverage down as fast as they can. They book profits to make up for other losses. Ouch.”

Image via Shutterstock

Changpeng Zhao, CEO of Binance Opens Up About Bitcoin & Current Crypto Market Situation

On March 7, 2020, the Bitcoin price took a big blow by falling from a staggering $9200 mark to $7,000 and again taking a hit to mere $3,500, later bouncing back to $6,000. In our previous article, we shared what could possibly be the reasons for such a fall.

Some analysts blamed the fall in Bitcoin price on the coronavirus outbreak, while some blamed it on the US stock market crash and international oil price fluctuation. However, Binance CEO, Changpeng Zhao has a slightly different opinion on this whole issue.

In one of his blog posts posted on March 20, 2020, Changpeng Zhao shared his thoughts on the current situation in the crypto market. He isn’t worried about the cryptocurrency at all. According to him, the fundamentals haven’t changed, and Bitcoin is still limited in supply whose demand is increasing, especially at this very moment.

Why did the price of Bitcoin go down?

To answer this question, Changpeng factored the price of Bitcoin on two major dimensions. The first one is die-hard believers vs. new-to-crypto. Die-hard believers are the ones who keep their crypto-asset intact and never sell them while the new-to-crypto may not understand crypto that deeply and better but are potential buyers.

The other dimension is those who ‘have spare cash’ vs. those who ‘scramble to pay the rent.’ ‘Have spare cash’ are the ones who have extra money, and even if the price of their crypto assets drop, they are still able to pay their living expenses. They buy more during the dip. However, ‘scamble to pay the rent’ are the ones who depend on short term gains to pay their rents. When the market takes a hit, they are forced to sell their assets.

According to Changpeng Zhao, no one knows the composition of such users in the crypto market. However, when the market takes a hit, more people start feeling the cash crunch and hence, a more definite conviction for selling off their crypto assets in the short term, and that’s what happened in the last week.

Is it because of the coronavirus?

“The 2008 financial crisis didn’t involve a pandemic. The dynamics and psychology are a little bit different. With roughly only 1 in 1000 people having or accepting crypto, it isn’t so useful in a pandemic situation just yet. When people fear the doomsday of empty shelves in stores and a shortage of food, people will want to hoard cash. So there’s increased demand or pressure of people wanting to sell their investments (stocks or crypto) into cash, again in the short term.” said CZ.

He believes that people will eventually understand that hoarding cash is no longer needed even in pandemic situations because many countries are equipped well enough with a sufficient amount of food and supplies. One they realize it, they will again invest their money in the crypto market.

Is crypto a safe haven?

Changpeng was quick to respond by saying, “you make your judgment. I made mine.” He further elaborated, “Either way, I hope you understand there are many factors at play in each moment. Don’t expect bitcoin to be guaranteed to go up when the Dow Jones index crashes, or vice versa. It’s not a perfect inverse correlation product. If you want that, you should just short the Dow Jones Index futures.”

Past vs. the present: Anything different from 2008?

Changpeng Zhao did acknowledge that there is a difference between the current situation in the year 2020 vs. 2008 financial crisis. In the year 2008, there wasn’t a pandemic pausing the global economy. He believes that COVID-19 is just a trigger and not the real root cause. He insists that our economy should be more robust, strong enough to take on shocks like this.

At the end of his blog post, he summarized his article with his iconic slogan, “Long Bitcoin, Short the Bankers.”

Image via Shutterstock

COVID-19 Market Climate Perfect Catalyst for Bitcoin Demand Says Binance.US CEO

The coronavirus panic-driven frenzy to acquire assets of lasting bona-fide value has put the traditional gold market to the test and may be creating the perfect catalyst for Bitcoin according to Binance.US CEO Catherine Coley.

COVID Grounds Gold

Gold is the world’s traditional safe-haven asset but according to a report by Bloomberg on March 26, the commodity is struggling under the combined weight of coronavirus fears and central bank money printing.

As the coronavirus has grounded most airlines and continues to wreak havoc on logistics and supply chains, moving physical bars of gold has become the challenge.

In the report, Vincent Tie, Sales Manager, Silver Bullion Pte Ltd was quoted saying “Since last week, face masks, hand sanitizers, toilet rolls, and bullion have something new in common – they run out when everyone tries to buy them.”

Coronavirus may Create Perfect Climate for Bitcoin

After initially trading down heavily in correlation with equities and other risk-on assets, the price of gold has bounced back over 10% in the past week.

The price patterns of the traditional safe haven asset, since the markets began to crash, have resembled those of Bitcoin, which also fell precipitously before recovering.

Typically people buy gold futures due to the inconvenience of having gold bars physically delivered. But with a slowdown in the deliverability of gold bars due to airport disruption comes the risk that futures prices may rise excessively over gold prices.

The coronavirus pandemic is a black swan event and the entire global market is in new territory, but gold has not proven immune to that. However, many crypto industry insiders believe that cryptocurrency and Bitcoin have the potential to benefit.

The combination of the digital nature of Bitcoin, the search for value in the troubled markets and gold’s inability to effectively meet demand could be the catalyst that the original cryptocurrency needs, according to Catherine Coley the CEO of Binance.US.

Coley said, “Despite the market downturn, Binance.US is seeing unprecedented trading volumes, with especially active trading in Bitcoin. We are also seeing heightened interest in stablecoins as investors recognize the importance of hedging volatility during highly uncertain times.” She added, “ Bitcoin has always been built on the idea of a need to send and receive value in a safe and secure way and that’s not going anywhere.”

Coming Inflation Shock Will be Bitcoin’s Safe Haven Catalyst

While we will have to wait and see if the confusion in the gold market brings the Bitcoin safe have narrative to fruition, recent research by BitMEX see Bitcoin achieving its potential during the times of shock inflation they have predicted will follow the central banks’ stimulus packages and excessive currency creation.

The BitMEX Research published their analysis, Inflation is Coming, on March 17, outlining that the global response to the pandemic and disruption will, “mark a significant economic regime change from monetary policy to central bank funded fiscal expansion” from which intolerable market inflation will rise. It will be within this oncoming financial environment that Bitcoin’s true nature should finally be revealed.

The researchers claim that not only will inflation come, “it will be a shock” as inflation has been low and stable for 30 years and our collective memory does not nor recall the consequences of digging ourselves into such a financial hole. Although they do not specify exactly when the inflation will hit, BitMEX predicts it will be “similar to the 1970s where it went as high as 15%.”

The analysis by BitMEX’s research arm stated, “In our view, in this changed economic regime, where the economy and financial markets are set loose, with no significant anchor at all, not even inflation targeting, it could be the biggest opportunity Bitcoin has seen, in its short lifetime.”

Image via Shutterstock

Bloomberg Report: COVID Stock Market Shake-Out Accelerating Bitcoin Maturation Into Digital Gold

A new report from international news agency Bloomberg indicates that the COVID pandemic’s shake-out of the stock market may be accelerating Bitcoin’s maturation into a new kind of digital gold.

According to the April 2020 Bloomberg Crypto Outlook entitled Bitcoin Maturation Leap, the stock market’s volatility instigated by the coronavirus disruption has shaken up the entire crypto market and may have greatly accelerated Bitcoin’s transformation into a safe haven asset like Gold.

Per the report, “This year marks a key test for Bitcoin’s transition toward a quasi-currency like gold, and we expect it to pass.”

Source: Bloomberg Crypto Outlook:Bitcoin Accelerating Maturation

Although Bitcoin did lose almost 30% during the intense economic downturn in March, according to the researchers it only lost 6% in terms of its annualized basis. Analysing the increase of interest in option futures contracts and a remarkable decrease in volatility the report read, “Bitcoin is maturing from a speculative asset toward a digital version of gold.”

Bitcoin Accelerating into a Safe Haven

The research states that Bitcoin is becoming less of a risk-on asset and the researcher’s believe that Bitcoin’s price plunge will prove temporary.

Source: Bloomberg Crypto Outlook:Bitcoin Accelerating Maturation

The researcher’s explained, “When the S&P 500 declined almost 14% in 4Q18, Bitcoin declined about 45%, and both bottomed about the same time. Indicating the first-born crypto is still susceptible to the receding stock-market tide, but in more of a bullish divergent condition, Bitcoin remains up about 9% in 2020 and is hovering near its $8,000 support level, despite about a 20% S&P 500 correction. Our graphic depicts the spiking nature of the correlation between Bitcoin and the S&P 500, notably when equities decline swiftly.”

Noting Bitcoin’s on-chain indicators are remaining price supportive, the report reveals that the coronavirus appears to be accelerating Bitcoin’s performance much more than the broader cryptocurrency market.

With the upcoming Bitcoin halving the researchers believe good news is on the way, stating, “Cutting the supply in half in May will provide another price tailwind in our view.”

Bitcoin Is Better Than Gold: Crypto Exchange Coinbase

On May 1, the world’s leading cryptocurrency exchange, Coinbase, published an article claiming Bitcoin to be superior to gold. The crypto exchange had earlier published a similar article where they supported Bitcoin over Gold due to its ease of audit, anonymity, low transaction fee, and ease to be fragmented into smaller fractions. “In the wake of the market meltdown, many investors are pouring their money into gold as a so-called “safe haven”, in the hopes that its value won’t waver like fiat currency. But there isn’t enough physical gold to meet demand right now,” read the Coinbase blog post.

Coinbase highlighted LA Times’ article which described the current gold crisis as ‘historic squeeze’ and said that the news of gold bars being sent from Australia’s Perth Mint to New York to fill in the shortage affirms the fact that Bitcoin’s digital nature and ease of transfer at low cost makes it better than gold in terms of value storage.”The recent challenges of the gold market reveals Bitcoin’s distinct advantage over gold: Bitcoin does not rely on fragile physical supply chains and is truly globally accessible,” stated the Coinbase post.

Coinbase also went on to highlight the difference in the value of gold in the CME’s Comex (New York) Exchange and London Gold Spot market due to hampered supply chain and gold refineries operation due to COVID-19 outbreak. The crypto exchange later pointed out that the Bitcoin algorithm is still working to generate 12.5 Units of Bitcoin in every 10 minutes, thus keeping the supply intact, unlike gold.

“Today, Bitcoin’s rate of new supply is ~3.6% per year and will soon drop to ~1.7% on May 12th, setting it on par with gold’s historic scarcity,” Coinbase wrote.

The blog post also highlighted the return on the investment aspect of Bitcoin and compared it with gold. According to Coinbase, in terms of return in the year 2020, Bitcoin has outperformed gold and S&P 500 where Bitcoin has a +20% return while gold and S&P 500 have +12% and -8% returns respectively as of April 29, 2020.

Image via Shutterstock

Billionaire Shark Tank Investor Mark Cuban Changes Tune on Bitcoin as Store of Value

Mark Cuban, a billionaire entrepreneur famous for his role as an investor on Shark Tank where aspiring entrepreneurs pitch their business models, has watered down his Bitcoin criticism and now appears to view it as a store of value.

Complimenting Bitcoin

During a conversation with Preston Pysh, a bitcoin believer and co-founder of the Investor’s Podcast Network, Cuban tweeted that Bitcoin can be a store of value. Still, it has not yet proven that it can replace the present financial system.

This response by Cuban marks a remarkable change in the billionaire’s attitude towards Bitcoin, when compared to a response he made late last year after being asked why he was not a crypto supporter.

He stipulated, “I’d rather have bananas. I can eat bananas. Crypto, not so much. Look, I can make a great argument for blockchain. There’s a lot of applications, and they’ll be used. But you don’t need public Bitcoin, BTC. You can create blockchain on your own without using all the available cryptocurrencies.”

Cuban’s view about Bitcoin being a store of value comes at a time when a recent survey revealed that 60% of Bitcoin supply has not moved in the past year. The on-chain analysis company noted that this trend illustrated investor’s hodling behavior as the leading cryptocurrency is regarded as a store of value.

Bitcoin making airwaves

Cuban’s sentiments show the way Bitcoin is no longer an asset that is in oblivion in the eyes of many investors.

Moreover, analysis from leading companies like Bloomberg suggests that Bitcoin price could surge past $20,000 this year, by doubling an all-time high of $14,000 recorded last year. It further indicated that adoption was the key metric as the much-anticipated Bitcoin halving event took place on May 11, and mining rewards were slashed from 12.5 BTC to 6.25 BTC.

Bitcoin Most Popular Crypto in North America, Market Experts Report

Bitcoin (BTC) has always been the most popular cryptocurrency on the global market, but the region that is most invested in BTC assets appears to be North America.

Cryptocurrency Trading in North America

According to a recent report by analytics firm Chainalysis that surveyed the key trends on North America’s cryptocurrency market, North America is the third region most active in cryptocurrency trading, trailing behind Western Europe and East Asia. However, what was interesting was that compared to their counterparts, professional and institutional investors in North America tend to favor Bitcoins over other cryptocurrencies when it comes to driving their digital assets forward.

The Chainalysis report indicated that in terms of investment strategy for North Americans, “the first thing we see from the data is that North American investors disproportionately favor Bitcoin.”

Source: Chainalysis

North American crypto holders were also reported to follow a buy-and-hold model, whereas East Asian investors preferred to trade their digital assets more frequently.

Bitcoin Leads the Crypto Market

In any given region in the world, BTC is the most popular cryptocurrency, valued to be north of $11,800 in market capitalization at the time of writing. After months of being in a slump, Bitcoin recently made headlines globally with a solid bull run, surging past the $12,000 mark on August 2 and reaching its all-time high in 2020. Market experts were quick to comment on Bitcoin’s surge, saying that the flash move should come as no surprise and that further gains should be expected of BTC. Many industry experts seem to think that Bitcoin reaching past the $10,000 after months of inactivity is just an anticipation of the next bull run, as the dollar is currently weakening with the Federal Reserve mass printing USD for stimulus relief.

Co-founder of Gemini crypto exchange and a huge BTC advocate, Cameron Winklevoss said that “not owning Bitcoin will be a worse investment decision than not investing in Amazon,” in this day and age.

High Risk, High Return?

With Bitcoin’s recent surge on the market, gold also rallied. JP Morgan Chase commented on this market phenomenon and observed that older investors seemed to prefer backing gold, while younger investors and millennials favored cryptocurrency and technology stocks. JP Morgan Chase strategists observed that those born between 1946 and 1960 leaned towards gold investments, as it is regarded as a safe-haven asset.

Saving for a Rainy Day with Bitcoin & Tech

On the other hand, tech and cryptocurrency investments come with higher risks, as evidenced by the volatility of Bitcoin on the crypto market. CEO of deVere Group Nigel Greem seems to think that Bitcoin will potentially knock gold from its long-held position of being a safe-haven asset. The founder of the financial consultancy firm backed his statement by pointing to how the trading market was “surging in tandem with gold on US-China tensions.” Other crypto experts looked at the depreciation of the US dollar as an indicator that Bitcoin assets were gaining popularity as an alternative investment.

In light of the pandemic, the US has been administering stimulus checks as part of their economic relief protocol, and it has been observed in the past that some of these funds have been redirected towards Bitcoin investments.

The US government has announced that the second stimulus payments are going to be administered sometime this month.

Warren Buffett Changes Attitude on Gold, Not Bitcoin Reminds Peter Schiff

Warren Buffett has made a shock investment buying a stake in Barrick Gold Corp after previously calling gold a “non-productive asset.” Peter Schiff mocked the Bitcoin community reminding them that Buffet once called the cryptocurrency “rat-poison squared” and will likely never invest in Bitcoin.

Warren Buffett made some significant investment changes in the second quarter. Buffett has added a new stock to his Berkshire Hathaway portfolio by taking a stake in Barrick Gold Corp. Barrack Gold corporation is a leading Canadian mining company that produces gold with 16 operating sites in 13 nations.

Buffett has always been critical of gold, but now things have changed. He currently sees where profit would come from going forward. The price of gold has surged this year up almost 30% as investors have sought safe havens. Buffett’s current move to buy a gold stock has a significant impact as institutional investors would follow. The move not only ergo higher prices of gold but also prices of mining stock.

This clearly shows that Buffett is not positive on the US dollar or the US economy. He sees global central banks have entirely lost control as they are printing trillions and killing fiat money.

Coronavirus Crisis

Buffett has moved to pull out of stocks most affected by the COVID-19 related shutdowns. He did more selling than buying between April and June, Berkshire’s quarterly shareholding filing released on Friday 14th August 2020 made this clear.

Airlines were not the only stocks that Buffett sold during the coronavirus pandemic. Besides selling all his holdings in airline stocks, including Southwest Airlines Company, Delta Air Lines, Inc, American Airlines Group, Inc, and United Airlines Holdings, Buffett also dumped his bank stocks. The Berkshire Hathaway investor completely dumped all his holdings in Goldman Sachs and reduced his holdings in Wells Fargo by 26% and in JPMorgan Chase by 60%.

As the COVID-19 pandemic escalated, Buffett’s Berkshire has just acquired about 20.9 million shares of Barrick Gold Corporation, a position valued at $563.5 million at the end of the quarter. Hours after Buffett bought gold stock, the value of Barrack’s stock hit $29 from $26.99 on Friday 14th August.

The celebrated investor has also exited its holdings in Occidental petroleum corporation during the coronavirus pandemic. He also exited a position in Restaurant Brands International, the owner of fast-food restaurants including Popeyes and Burger King, which struggled as regional restrictions compelled dining rooms to close and customers stayed home more.

All bank stocks are in negative territory during this year, although they have not lost almost as much as energy and airline companies. Buffett may be shying away from banks due to the anticipation that loan defaulters could increase as the economic pain resulting from the pandemic continues, which Wall Street CEOs have recently warned of.

However, it was not all about selling, Berkshire has added to its earlier stake in Store Capital Corporation (real estate investment trust company) and its holdings in Liberty media corporation (US mass media company) and in grocery chain Kroger company.

Rat Poison Squared

Peter Schiff, the American stock broker, gold bull and enduring Bitcoin opponent was only too happy to remind the Bitcoin community that Buffet will likely never invest in the cryptocurrency.

Schiff tweeted:

“Bitcoin pumpers are exploiting Buffett’s decision to buy Barrick Gold. Since Buffet changed his mind about gold, he may change his mind about Bitcoin too. While he called #gold a non-productive asset, he called #Bitcoin rat poison squared. Buffet will never buy Bitcoin!”

He further added:

“Buffett’s decision to buy Barrick Gold and not Bitcoin or GBTC is a further condemnation of Bitcoin. Buffett clearly doesn’t thinks Bitcoin represents a threat to gold or its dominance as a safe-haven asset. Buffet knows #gold is here to stay and #Bitcoin is just a passing fad.”

Despite increasing institutional demand and growing mainstream investment, Schiff is the eternal Bitcoin bear. Meanwhile Bitcoin’s price continues to test the $12,000 resistance gaining close to $9000 since the March crash and gold has surged to nearly $2000.

Image source: Flickr: Shannon Patrick

Canada-Based Tahini's Restaurants Trades Entire Cash Reserves For Bitcoin

Tahini’s Restaurants recently tweeted that they have just converted their entire cash reserves into Bitcoin. The Middle Eastern restaurant has three outlets across Ontario and is commonly referred to as “the best Middle Eastern Restaurant in the world.”

Bitcoin Flying High Under the Radar

The decision to convert its cash reserves into cryptocurrency originated from the March’s crash due to coronavirus pandemic. During that time, the Canadian government started offering assistance programs for businesses unable to stay open because of the pandemic.

The COVID-19 crisis brought most businesses to a standstill for the first half of the year. The food and hospitality industry was one of the worst-hit industries. Tahini’s was adversely affected by the COVID-19 pandemic as it had to lay off a huge number of employees. The company is in its expansion phase, having plans to expand its three new franchise outlets in Ontario.

Since the laid-off employees were getting assistance from the government more than what the restaurant could pay, they did not turn up for work. The situations were conducive to the laid-off employees as the stimulus programs left them with a lot of money. The employees had enough money, a situation that Tahini’s owners say could make fiat money worthless if everyone has cash in abundance.

With Canada and the US printing money to save their economies from the coronavirus crisis, Omar Hamam, the owner of Tahini’s, began thinking that a significant currency devaluation would soon occur. An influx of cash is making its way into circulation due to the massive stimulus payment given to offset the coronavirus economic shutdown.

Hamam said that the decision to embrace Bitcoin is based on a popular perception that the leading cryptocurrency is widely seen as a safe-haven asset. Just like other smart money investors and businesses, Tahini’s sees Bitcoin as a suitable hedge against the debasement (devaluation) of fiat currencies that is likely to follow as Fed and other central banks across the world are increasing fiat money supplies at an unprecedented rate.

The restaurant owners endorsed Bitcoin as a better alternative to cash savings and plan to continue switching all of its excess cash into Bitcoin. The company embraced cryptocurrency and swapped all of its cash savings into Bitcoin, by coming across various cryptocurrency platforms and influencers, including Raoul Pal, Jeff Booth, Saifedean Ammous, Robert Breedlove, Preston Pysh, and cofounder of Morgan Creek and poplar crypto personality, Anthony Pompliano.

In a long thread, the restaurant chain tagged platforms and influencers that helped them along their journey of embracing the crypto industry and thanked all of them.

Tahini’s seems to follow the same financial planning strategy as listed business intelligence company MicroStrategy, who announced last week that it adopted Bitcoin as its primary reserve asset. MicroStrategy bought 21,454 BTC worth of $250 million. The $1.2 billion company revealed that it now holds Bitcoin as a treasury reserve asset instead of cash.

Bitcoin Adoption Rate on The Rise

The adoption of Bitcoin cryptocurrency continues increasing alongside the demand for this finite digital asset among businesses. As the crypto industry continues maturing, several businesses and traders across the globe are turning to embrace Bitcoin as a safe haven against inflation. Within this month, two popular companies (i.e., MicroStrategy Inc., and Tahinis Restaurants) have announced swapping their cash reserves to cryptocurrency. Not only businesses but also general consumers are turning towards crypto assets to retain their wealth. Particularly, developing countries are the most inclined towards cryptocurrency adoption.

Grayscale Predicts Bitcoin Price and Use-Cases to Increase as Economic Inflation Accelerates

Grayscale Investments reported that Bitcoin is increasingly being hoarded by long-term investors over short-term traders creating less supply and consequently driving demand, demand that will increase as quantitative easing continues to debase the US dollar global reserve currency.

Grayscale believes that the United States floating the economy with aggressive quantitative easing has seen Bitcoin investors convert from speculative traders to long-term holders of the safe haven asset.

In a new report by the institutional-grade crypto fund management firm published on Aug.20, Grayscale predicts that the demand for Bitcoin will only increase as economic inflation accelerates. The desire to hold on to wealth by safe-haven investors coupled with the scarcity of Bitcoin as an asset will continue to drive the Bitcoin price to new highs as the negative effects of government quantitative easing become more disruptive.

Grayscale Investments predict in the report, that use-cases for Bitcoin will also increase in the mainstream markets as the recent quantitative easing measures have highlighted a need for a scarce monetary commodity like Bitcoin.

Accelerated Inflation and Bitcoin’s Value: Wall Street Legend Agrees

Since the US dollar abandoned the gold standard of currency, Grayscale asserts that the United States monetary policy has continued to create cycles of debt followed by periods of aggressive quantitative easing.

Grayscale reports that the increasing dependence of the United States to print money it does not have to stay buoyant economically, as maintain status as the world global reserve currency, shows no signs of stopping in financial cycles to come. The report asserts that investors who are wary of inflation are now searching for ways to protect against the limitless FED liquidity and money supply— which boosts the case for Bitcoin as a store of value.

George Ball the former chief executive of Prudential Securities and current chairman of Sanders Morris Harris has joined the growing list of traditional financial industry experts to advocate for Bitcoin as a safe have asset and hedge against inflation. With similar justification and analysis Ball agrees with Grayscale’s conclusion on the effects of quantitative easing.

Explaining his about-face on Bitcoin as a safe-haven asset, Ball said in the interview:

“I’ve never said it before, but I’ve always been a blockchain and Bitcoin opponent but if you look now, the government can’t stimulate the markets forever. The liquidity flood will end and sooner or later the government’s got to start paying for some this stimulus, for some of the deficits […] are they going to raise taxes that high or if not? Are they going to print money? If they print money that debases the currency and probably even the Treasury Inflation-Protected Securities can be corrupted. So the very wealthy investor of trader probably turns to Bitcoin or something like it as a staple.”

The former Prudential Securities chief executive predicts that following September 7, Labor day, a migration will “ignite” from traditional finance to Bitcoin trading and hedging as citizens will look to secure their wealth in an asset that cannot be “undermined by the government.”