“It’s exactly why bitcoin (BTC) was created,” Michael Novogratz, told CNBC last week.
This is very common to hear from Bitcoin bulls these days: The U.S dollar, as well as other fiat currencies, will eventually be hyperinflated by injections of trillions of dollars of monetary stimulus and coronavirus related aid by central banks and governments. Being that Bitcoin is a hedge against inflation this should theoretically strengthen the case for the most well-known cryptocurrency.
Such predictions will likely come true eventually, but for now, bitcoin investors are stuck holding the asset without seeing any sort of fantastic gains. Bitcoin has just pushed over $7,100 today but for the past few weeks, it has had trouble holding this zone. The asset hasn’t reliably traded above the $7,000 zone since early March.
Any sort of inflation from the above-discussed stimulus plans may not appear immediately. This is partly because of the huge increase in unemployment and a decrease in economic demand that could mitigate rising pressure on consumer prices in the short term. In The U.S. we’ve seen the filing of roughly 10 million new claims for unemployment. Economists at JPMorgan predict that this weeks report will reveal another massive increase, this time we may see another 7 million claims.
The devaluation of money is not something that happens immediately, but gradually over time.
Will you be buying Bitcoin and other cryptocurrencies during this turmoil? It seems as if this is the only way to relieve the pressure on our own wallets in the case that this situation becomes much worse.