Regardless of Friday’s declines, which have just brought Bitcoin back below $8,000, the global economy is in serious disarray, and it’s only going to get worse. Central banks are pumping empty money into the market, interest rates are going negative, and GDP data is falling. But is BTC still a safe haven in times of financial turmoil?
The crisis is coming
The US national debt now stands at nearly $23 trillion, and the central bank continues to print money and buy assets in the name of quantitative easing. The Fed is lending money to banks to pay down short-term debts as cash reserves slowly run dry. These repo activities are set to continue, with interest rates likely to fall even further under pressure from President Donald Trump himself.
Cameron Winklevoss in in your tweet mentions that currently huge amounts are held in negative interest bonds. This is the reason why “why you should own BTC” – thinks the young businessman.
A little over a decade ago, banks plunged our world into one of the worst financial crises in our history. Banks simply cannot be trusted, and that is partly why Bitcoin was created. That is what cryptocurrency advocates might think today. And they are probably right!
This week, China pumped $28 billion into the market. In this artificial way, they want to save an economy that is already showing signs of slowing down. Today, the country’s GDP data was also published, indicating the slowest growth in 30 years. In the background, there is an escalating trade war with the US and a general cooling of market sentiment in the world’s second-largest economy.
This is not the end. Brexit awaits us, perhaps in the near future new problems of the European Union will appear. The situation in the Middle East threatens to escalate unrest.
All of this has already contributed to the global economy’s problems. This week, the IMF warned that global growth was falling to its lowest level since the international financial crisis.
Bitcoin Rate and the Idea of a Safe Haven
In times of uncertainty, people don’t want to rely on their governments, and certainly not their banks. Hence, the idea of Bitcoin as a safe haven is coming back into favor. According to experts “Bitcoin was an overreaction to the financial crisis and the monetary system that allowed it to happen. Today, instead of functioning as an efficient peer-to-peer cash transfer system, BTC is evolving into a store of value like gold.”
So maybe BTC won’t be a means of payment in the future, as Satoshi Nakamoto wanted, but rather a kind of store of value? We’ll learn many answers when the economy hits another turmoil. So soon…
