Rampant Inflation Is on the Way and Here’s What it Means for Bitcoin

We currently have govern­ments and central banks worldwide stepping up to try to save their economies from imploding. But as we know, they are imploding because every­body’s on lockdown, and produc­tivity is grinding to a halt. There’s going to be a lot less stuff produced. There will also be a lot less demand for that stuff as people are locked in their homes and unable to go to restau­rants, bars, stores, museums, or anywhere else.

The govern­ment is trying to solve this with money. They’ll be printing lots and lots of money. They’re going to make it easy for people to take out loans. Mortgage rates will go down. Small business loan rates will go down. There will be tax breaks. We’re going to see helicopter money (i.e., people getting money directly from the government).

Source: The Finan­cial Times

What Does This Mean For Money?

So you have to ask yourself: What does this all mean for money? As they produce more of it, each individual money unit loses value (i.e., infla­tion). Usually, we have a little bit of infla­tion every year. The govern­ment will tell you that the infla­tion rate is about 2%, but that doesn’t match reality. Just look at things like educa­tion, housing, the stock market, etc.; the price of those things is increasing at a rate higher than 2% in recent years.

We had maybe a trillion dollars worth of base money going into the finan­cial crisis of 2008. We came out of that crisis with about 4 trillion. We’re going to see much bigger prints this time. The Fed’s balance sheet is already at $4.6T and growing as it continues to buy more and more assets to rescue the market.

There’s only one asset on this planet that is infla­tion proof: Bitcoin. The supply of Bitcoin cannot be inflated. Even the supply of gold can be increased if it becomes profitable. With Bitcoin, that’s just not possible.

“There’s only one asset on this planet that is infla­tion proof, and that is Bitcoin.” 

 — Yan Pritzker

The Impact on Bitcoin

What does this all mean for Bitcoin? 

Well, in the long run, it means that once people realize what’s happening to their money, they will start buying Bitcoin since it’s the only thing that will not be subject to monetary policy manip­u­la­tion. Unfor­tu­nately, Bitcoin, like every­thing else, took a drop recently. This was to be expected since there was a mass panic sell-off of all assets, which was forecast by many in the space.

Bitcoin isn’t quite where it needs to be regarding market cap and penetra­tion to survive unscathed events like this. We only have $150 billion worth of Bitcoin, so it will suffer during an event like the coron­avirus. But it’s impor­tant to under­stand that Bitcoin’s design is to be infla­tion proof, seizure proof, and censor­ship-resis­tant. Those charac­ter­is­tics are unchange­able, whether there’s a crisis or not. As more people wise up to this, we will see more and more demand for Bitcoin. And you know what that means for Bitcoin’s price.

“Bitcoin’s design is infla­tion proof, seizure proof, and censor­ship resis­tant. Those charac­ter­is­tics are unchange­able, whether there’s a crisis or not. And as more people wise up to this, we’re going to see more and more demand for Bitcoin.”

 — Yan Pritzker

The Halving is Coming Too

It’s impor­tant to remember that we are entering into the halving in May, where the amount of new Bitcoin being produced will be cut in half. It’s quite a striking coinci­dence that this will happen at a time when the amount of every other money being produced in the world will go up tremendously.

Google Trends for “Bitcoin halving” (captured on March 27, 2020).

While every other market in the world is dropping, Google Trends for “Bitcoin halving” are at an all-time high. People are wising up to this.

The question is: Do you want to be the first to know that, under­stand it, and act on it? Or do you want to be the last?