EU euro crash

Analysts Fear Bitcoin Price Crash as EU Struggles to Keep Head Above Water

By Hooked2TheChain | hooked2thechain | 15 May 2020


29b9d5c7b8579c8bb581bbc45a969747dcd58e7ea88f27e4387dfeaa3390697a.jpeg

One could easily argue that bitcoin has had more important news affecting it in the past month than it has in year prior to it.

It's recent 160% price rally has accompanied a great deal of content highlighting the contrast of bitcoin's halvening to fiat's explosive increase in supply, suggesting that this is some of the most bullish news there could be for bitcoin. Except, is it really?

There is one major macro-economic concern which could give bitcoin a ride for it's money. Approaching 30 years of existence, the EU now faces a serious threat of failure for which Brexit may just have been the trigger.

According to a forceful Twitter thread by Tuomas Malinen, CEO and Chief Economist of GnS Economics,

"The breakup of the Eurozone is a near certainty."

While popular tweets ought to be taken with a grain of salt, due to their nature of often being exaggerated for effect, Malinen raises important concerns which cannot be swept under the rug.

tuomas malinen

The long and short of the tweet can be summed up as follows:

  • Germany's Constitutional Court made a staunch ruling regarding the ECB, suggesting it is entertaining thoughts of withdrawing from the EU.
  • The bailouts being proposed to counter the COVID-19 outbreak may cause citizens of creditor countries to object to their taxes being used to bail out banks of other financially distressed countries, thus eroding the cohesiveness of the union.
  • The "unlimited QE" that the EU is currently implementing will serve to further distend the already high sovereign debt burdens of key European countries.

According to Travis Kling - founder of Crypto Asset Management firm Ikigai and former manager of a $200m Equity Portfolio - this is an important macro-economic factor to consider for bitcoin's price. He explains in a tweet that this would lead to investors wanting to take risk off the table, thus leading to a crash in bitcoin's price. Interestingly, he notes that this could subsequently also be a principal cause of "hyperbitcoinization", a state where Bitcoin becomes the world's dominant form of money.

 

Despite bitcoin's delirious price rally, it was just last month that the king of cryptocurrencies endured a devastating 45% crash on Black Thursday. Bitcoin has had a strong correlation with the largest retracements of the S&P 500, in spite of the effort of a myopic retweet by bitcoin's largest (unofficial) Twitter account to suggest otherwise, as can be seen below.

SPX bitcoin correlation

 

In conclusion, the very factors which present excellent arguments for buying and using bitcoin over fiat - a crumbling of existing financial institutions - are the very factors which will likely lead to large interim crashes in bitcoin's price.


Want to connect? Follow me at @hooked2thechain on Twitter!

Want to hear and see me talk crypto? Subscribe to my YouTube channel!

Want more of my content here? Follow me on Publish0x

New to Publish0x? Register today and start earning free crypto for reading and writing!


Note that this article contains a referral link and I may earn a small commission for my effort in spreading the word about crypto if you click on it.

 

 

 

   

How do you rate this article?


56

6

Hooked2TheChain
Hooked2TheChain

I spend all day researching, writing about and trading cryptoassets because they give the power back to the people


hooked2thechain
hooked2thechain

The idea of a bordlerless, trustless, immutable & decentralized form of value transfer transmuting into reality is the main reason I get up every morning.

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.