The Central Banks of many of the developed countries of the world are currently too busy to solve the problems of their citizens. But, to tell the truth, following the situation as it is would benefit all cryptocurrencies and the ecosystem in general at the end of the day.
Central Banks around Europe, Asia and the United States are busy injecting fresh billions of dollars every day to keep the international stock market standing.
This constant and indiscriminate injection of money; in many cases inorganic; It is called what is known as the economic theory of monetary easing.
For many of us this might seem nothing logical. Well, we know from simple economic theory; and by own experiences; that printing money in this way causes great economic problems; like hyperinflation; capital flight; interest rate rise; populist governments; among many other common problems in our region.
Departing the problem of inflation; which is also very serious. One of the problems generated by unlimited printing of bills or coins is as follows:
Money is a good like any other; and having an oversupply of money since the Central Bank has turned on the printer. It will cause the price of money to collapse; and with it his ability to buy goods and services.
Therefore, people for one reason or another, will want to get rid of that currency and acquire a safer one with more value or more scarce in this case.
But can there really be an oversupply of dollars 💵 or euros 💶 ?. The answer given by the theory of quantitative easing is no. Since it doesn’t matter how much money these big economies print; the international stock, forex, and many people markets around the world will always welcome a $ 100 or € 100 bill.
This is why the European Central Bank, or the Federal Reserve, is supporting that “never” there may be an oversupply of your fiat money. Will this always be true?
The economic crisis is very close
The truth is that this vision of developed countries has worked “well” since they began to implement it after the global crisis of 2008.
But; 12 years after this model of indiscriminate printing of money is already being noticed that it is coming to an end. And these signals are increasingly feeling stronger.
From the progressive cuts in the FED interest rate in the United States 🇺🇸; negative interest rates to savers in the European Union 🇪🇺, and more central banks. Or more recently, the disappearance of billions of dollars from international stock markets; not even gold was saved from this fall.
The coronavirus outbreak invoked a level of panic in the global financial market that had not been seen in the last decade. Many people are charging part of the blame on the new pandemic; but the truth is that this could be the drop that overflowed the glass.
Bitcoin says Keep up!
21 million is the magic number that many inside the critpoverso love. It is that this is the total number of BTC that can exist in the world, neither one more nor one less.
A totally analogous concept of what the traditional financial system is doing; with the infinite impression of money with quantitative easing.
The lack of correlation between Bitcoin and the financial market in general decreases the potential impact of macroeconomic events on the price of BTC.
But, when overall market sentiment and productivity are increasing as a result of the increase in liquidity, the investment of high-risk assets is more likely to increase; just as Bitcoin is.
If the panic continues to grow; either by the coronavirus 🦠, or the world crisis that is looming on the horizon; it coincides with some of the largest stimulus packages of large economies; It could restore investors’ appetites towards higher risk asset classes that include individual stocks and also the price of Bitcoin.
Currently, Bitcoin is valued at only $ 161 billion, less than 3% of gold. Consequently, cryptocurrencies are still considered a class of emerging assets with limited support from financial institutions.
Bitcoin could take several more years to reach a larger market capitalization, price stability and a stronger infrastructure to support it and act as a safe haven asset.
But without any doubt; more and more people are aware that in any case they can go to Bitcoin; and BTC will be waiting for you with open arms.