Bitcoin Supply Crisis is Affecting its Price!
As we have been explaining in most every one of our blogs. Bitcoin halvings are always followed by bull runs. Every halving kicks off a bull run. No deviations from this, ever. However, this year we had Covid 19 lockdowns and $7 trillion in new money supply printed this year alone. 22% of all USD in circulation was printed in one year! Incredible. It is very reasonable to predict “real” inflation in 2021 will be close to 20% or so. It was over 10% in 2019 per the chapwood index. It should end up in the 11% to 14% range in 2020. That should come out sometime in the first quarter 2021, officially, www.chapwoodindex.com.
It should come as no surprise that Bitcoin pumped over the Christmas holiday. It was $19K on December 15th. It briefly hit over $28K this weekend and is consolidating, or “recouperating”, at $27,064 at this time. Below is a chart showing the launch, from 12/26:
As of now there are only 3,946 Satoshis per 1 USD:
This is relevant to track as Bitcoin value eclipses $600 billion in market cap, satoshis are now 1/3946th of a dollar. That ratio has been dropping fast of late. Remember, there are 100 million satoshis in 1 Bitcoin. Bitcoin is highly divisable which allows it to maintain its scarcity. The market cap mentioned above has passed Visa and is now the larget financial service asset in the world. Bitcoin matches definitions as a currency, payment system, and a store of value. It is not so easy to define in general terms.
Microstrategy has put out rate of return analysis comparing the USD vs Bitcoin:
We can’t compare these rates of return without analyzing the DXY Index:
Remember the DXY is the index for the strength of the US Dollar. However, George Gammon brings up an excellent point about the dollar below, click here to see on Twitter.
The overall weakness of the USD IS why Bitcoin is such a great investment. The hardest money in the world. Earn dollars if you have to, but save in Bitcoin. If you can earn Bitcoin, even better. Or your savings will be melted away. The dollar hedgemony experiment since the Bretton Woods agreement in 1944 is ending. USD, Euro, CAD, AUD (Canadian dollar, Australian dollar) are all being debased at alarming rates. Bank of China has already started a central bank digital currency. Bank of England is already working on a CBDC (central bank digital currency). Bitcoin is becoming a threat to their solvency, since it has proven scarcity, it beats out every other currency trade. Government insolvency due to demographics (US babyboomers population is aging and leaving the workforce), and the deflationary nature of technology (computers, tv’s, cellphones get cheaper as technology improves) requiring central banks to print more money to pay back ever increasing debt. The only safe investments are scarce assets. Sound money is only created by scarcity. Bitcoin is the scarcest currency, store of value, in the world. Save in Bitcoin!
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