While many Bitcoin hodlers (BTC) hope that despite the COVID-19 pandemic and turmoil in traditional financial markets, or more precisely thanks to them, the BTC will soar, this might not happen without the active participation of the cryptosphere itself.
"Even though the properties of BTC are unique, the industry needs to work the way it talks about it, it needs to improve its marketing and user experience so that people can understand the reasons why it's an obvious investment opportunity and they are buying it, ”said Zac Prince, co-founder of BlockFi, a large American start-up specializing in lending crypto to Cryptonews.com. According to him, until there is a better option against the US dollar, it will continue to benefit from its status as a global reserve. However, "for fixed assets like Bitcoin, efforts to print money from fiat currencies are expected to drive upward price movements," said Prince. "For crypto, we will continue to see inflows from private and institutional investors, which is due to the acquisition of new customers by the main platforms."
A recent survey has shown that senior trading executives believe that the big trading companies are about to make the leap to crypto and that their favorite trading pair is the BTC / USD pair. Meanwhile, the big chat app operator Line has just sent another major sign of growing adoption, saying that 62% of the users of its Bitmax trading platform in Japan are new to crypto. Portable "gold" and inflation There is potentially more good news for Bitcoin and financial systems in general, as this global crisis could bring about fundamental change.
"While the financial crisis of 2008 led to the birth of Bitcoin, this new crisis could really be the one that defines Bitcoin as a digital asset, but also a way to bring real change to the financial system and democratize economies and markets. This could result in a more optimized financial system, which would be hybrid (both centralized and decentralized) with the best of both worlds, "said Hirander Misra, president and CEO of the financial and technology solutions provider GMEX Group, at Cryptonews.com. According to him, both gold and BTC investors are now partially withdrawing from the current financial system and in this way "they can overcome the economic contraction until things calm down".
"Turning to gold and the BTC and reducing short-term exposure to financial assets will also protect investors from a system that carries counterparty risk as governments and institutions are going to be more and more indebted, "he added, recalling that BTC is a digital asset and is more portable than gold. Even though it is tokenized gold fully secured by assets, the underlying asset still needs to be stored somewhere, added Misra. Meanwhile, Bitcoiners are talking about hyperinflation which should help the adoption of BTC. Last week, an Open Money Initiative report denied that Venezuelans are using BTC as a store of value against the devaluing bolivar. Rather, it is used "as an intermediary to obtain more stable currencies such as the US dollar, the Colombian peso, the Chinese yuan and various stablecoins".
However, if the U.S. dollar were also to devalue, Bitcoin is more likely to become a store of value. If global hyperinflation expert Steve H. Hanke, professor of applied economics at Johns Hopkins University, told Cryptonews.com that quantitative easing will not trigger hyperinflation, that doesn't mean as long as there will be no inflation at all. (However, Hanke believes "inflation is unlikely to be a significant threat"). The dollar could devalue in the next 12 months The extent of inflationary pressures will depend on the increase in the money supply necessary to facilitate these quantitative easing programs. In the case of the United States, the country has a large budget deficit, and it will increase due to: a) the economic contraction resulting from the crisis, and b) the aid program. "An increase in the budget deficit has a direct correlation with increased inflation, which, combined with an increase in the money supply, creates inflationary pressure on two fronts," said Misra.
