Macro Factors Creating ‘Perfect Storm’ To Drive Up Bitcoin Price: Report (#GotBitcoin?)
Digital asset research firm Delphi Digital says that the macroeconomic landscape is creating the “perfect storm” to ignite Bitcoin price appreciation. Macro Factors Creating ‘Perfect Storm’ To Drive Up Bitcoin Price: Report (#GotBitcoin?)
Monetary Easing, Crypto Peaking
In a fresh report cited by Forbes on August 1, the researchers isolate the dovish turn in global central banking policy as the stand-out factor likely to propel Bitcoin’s price skywards:
“First, and arguably most important, sentiment from global central banks took a drastic turn towards more dovish monetary policies. The Fed, ECB, BOJ, PBOC, and many others are now preparing market participants for more rate cuts and additional stimulus measures as they attempt to keep the current economic expansion going.”
Central bankers’ consensus around the need for quantitative easing stems a geopolitical landscape shaped by protracted trade tensions between the United States and China, disappointing GDP growth in Germany, and the anticipated aftershock of a possible no-deal Brexit.
The digital gold narrative
Beyond monetary easing, the increasing risk of fiat currency devaluation represents a longer-term catalyst that is likely to further drive the price of both Bitcoin and physical gold, the report argues.
As is often discussed, Bitcoin’s scarcity by design and its potential to serve as a store of value in a faltering world economy has earned it the moniker of “digital gold” — a narrative consolidated in Delphi’s new analysis.
In a discussion of the two assets, the report argues that the digital gold view is ever more relevant amid “extreme monetary policies and rising geopolitical tensions” and that:
“The relative size of Bitcoin’s market value compared to the investible gold market, for example, makes it a tempting opportunity for investors starving for assets with above-average growth potential as well.”
Delphi Digital, in fact, predicts that given its unique non-sovereign properties, the investible Bitcoin market could in future outgrow the current gold market — over $7 trillion as of fall 2018.
As reported just yesterday, a former top-level executive at Goldman Sachs has similarly predicted that Bitcoin’s market cap could hit around $8 trillion in future.
Delphi Digital’s view of Bitcoin’s correlation with macroeconomic factors has been echoed by the likes of Anthony Pompliano, who recently stated that the European Central Bank’s expected dovish turn will be “rocket fuel” for Bitcoin.
Also this summer, the head of global fundamental credit strategy at Deutsche Bank remarked that central banks’ dovish policies are positively impacting “alternative” currencies such as bitcoin while hurting investment banks. Macro Factors Creating ‘Perfect, Macro Factors Creating ‘Perfect,Macro Factors Creating ‘Perfect,Macro Factors Creating ‘Perfect
Macroeconomic Turmoil Responsible For Bitcoin’s Growth
he CEO of crypto payments firm Circle, Jeremy Allaire, suggested that macroeconomic turmoil is responsible for Bitcoin’s (BTC) recent growth.
During the interview with CNBC on Aug. 5, Allaire suggested that Bitcoin has become a safe haven used to store wealth in times of geopolitical and macroeconomic turmoil. Allaire stated that there is a correlation between the recent coin’s gains and the devaluation of the Chinese yuan that just touched its 11-year low, stating:
“You can very clearly see some macro correlation there. I think the broader theme of, you know, Bitcoin specifically, crypto more broadly participating in these global macro forces is becoming more and more clear. Rising nationalism, rising amounts of currency conflict, trade wars, these all obviously are supportive of a non-sovereign, highly secure digital store of value.”
China Softening Its Stance On Crypto?
The interviewer also asked Allaire whether he believes the growth was caused by an inflow of Chinese capital or just investors trying to capitalize on the anticipation of this inflow, given that Bitcoin is not easily purchasable in China.
Allaire answered that China is a significant participant in the cryptocurrency market through offshore firms, and that the government is softening its stance towards Bitcoin.
The Circle CEO cited how, in July, the Bank of China, one of the four biggest state-owned commercial banks in the country, released an infographic on its website, illustrating what Bitcoin is and how it has been legally recognized as property in the country’s courts.
Lastly, Allaire noted that major cryptocurrency exchange Huobi has created a Communist Party branch as part of its legal obligations, signalling that it is developing closer ties with the Chinese state. Under Chinese law, any company with more than three Communist Party member employees must set up its own branch.
As Cointelegraph reported in April, Allaire stated that the crypto and blockchain industry is a fundamental redesign of the basics of how civic society will ultimately function. At a panel dubbed “Money and Payments in the Digital Age,” Allaire said that blockchain and crypto are more than just payments instruments, but also a fundamental new system for record-keeping.
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