Bitcoin is in a bull market and is not having a ‘Bear market’ rally. Next stop is 11,000
Two things are driving this.
Coronavirus. Bitcoin is flight/safe haven capital and the globabl fear of this outbreak is creating demand for BTC. For me it is the indicator of the spread or otherwise of this worrying disease.
The Halvening. Coming in May, likely the 12th, this will drop the mining reward to 6.25 BTC from 12.5. The idea is that this will make BTC worth twice what it is now. Maybe it will maybe it wont but it certainly wont make BTC cheaper and if demand for new coins is constant it will drive the price up over time
So here is the chart of what we can expect with no shocks cropping up.
Its hard not to imagine a moonshot happens next but there is nothing to mandate it.
When Coronavirus is controlled we can expect a pull back but as I keep reminding myself, the future of the world is full of such events to try our patience and pump ‘fiat’ into flight capital.
Much over $11000 and BTC will look very exciting indeed.
Now something interesting struck me this morning that I hadn’t recognized. Inflation is the same in the US, Europe and the UK.
US 1.9%
EU 1.93%
UK 1.94%
That’s a lightbulb moment for me because it shows that this block is sync’d up in monetary policy at the hip. This has all sorts of consequences I’ll have to noodle on for weeks and many investing implications and opportunities, but the interesting thing for BTC is after the halvening the BTC inflation rate will be
1.83%
This should mean on its own, that BTCs value should rise in terms of a basket of these currencies as its inflation will be below theirs and provide a hedge and carry. This is only marginal but it wont take much of a rise in inflation to start to make a significant widening. There are many forces driving asset price inflation but the best returns are to be had on assets which are in finite supply. BTC has a finite supply and the consequent upward price pressure is gong to be enhanced by new supply being less than inflation and significantly less than real global growth of 3%.