302,118,890,461 Market Cap
70% BTC dominance (wow)
$11,786.24 BTC Price
The global markets are concerned about currency manipulation and trade wars, it’s the driving reasons behind the volatility in the stock market (which was more volatile this week than crypto) and also impacts other global markets.
First, what is currency devaluation?
The definition is “In modern monetary policy, a devaluation is an official lowering of the value of a country's currency within a fixed exchange-rate system, in which a monetary authority formally sets a lower exchange rate of the national currency in relation to a foreign reference currency or currency basket”
There are ways to do this outside of fixed exchange rates too, for example by printing more currency through QE, it devalues your currency. Inflation will catch up and bring prices up to the corresponding level that the currency is devalued.
How / why is this relevant to Bitcoin?
Well, countries globally need inflation… why? to reduce their enormous debts and to stimulate growth. However, central banks want ASSET inflation, not consumer inflation (meaning products, food etc). In order to stimulate ASSET inflation, central banks need to use monetary policies to encourage investment… low interest rates, QE, tax reliefs etc. This way, more capital is flowing into assets, and consumer confidence remains high.
To put a long story short, the only way to keep the bubble from bursting is to keep stimulating it and inflating it higher and higher. This means two things…
1) Fiat currencies will all eventually become worthless (which historically is true)
2) Global central banks are not going to stop printing money any time soon.
So, while the global banks increase money supply in the hope of asset inflation and debt eradication, Bitcoin has a fixed supply. With a fixed supply of Bitcoin, and asset inflation friendly policies, it is likely that Bitcoin will absorb some of the new capital introduced. Whether that is through investments in cryptos as a hedge or through organic correlated growth.
So Bitcoin as a currency has the properties to store value, as it is limited in supply so the price (if demand is stable or increases) can only increase.
It’s worth mentioning that Bitcoin’s dominance is at a relative high, which indicates that we very well could see an Alt rally during the next leg upwards. A lot of capital is sitting in bitcoin waiting for the next move in the market, and if it is upwards, the capital is likely to diversify into solid alt projects.
Hope you have a great weekend.
All the best,
Devin
Thanks - reading your post and info I have stayed up to date - understand your thoughts and perspective>