馃獧馃攼 WHAT COULD HAPPEN IF BITCOIN IS USED AS A GLOBAL RESERVE CURRENCY? 馃攼馃獧
In recent times, some voices have claimed that Bitcoin [BTC] is a "safe heaven". The logic behind this could make sense: "FIAT money is losing its value due to increasing debt and lack of trust in governments. Therefore, a finite asset is needed to preserve value and trust". Whether because of the above or because of its dazzling profitability, many investment funds and governments have taken positions in what seems to be a panacea.
In life there are many truths and lies that overlap. FIAT money is trash due to bad political decisions and inflation effects, but also BTC is the new pyramid scam. Today, the number of holders is barely increasing over time. It is too early for their destruction (not to be confused with ≈50% drops); more people need to sign up. Everyone needs to trust BTC without hesitation because there are only 21,000,000. Nothing in the world is more reliable than a fictional character delivering fire to humanity, like Prometheus. What could go wrong?
The world is turning to nationalisations, confiscations and extremist regimes; we have one generation left to exhaust this "new" model. BTC in the coming decades could be a useful tool to maintain a pseudo-global economy. Perhaps, when peace comes after WW III, and before the new liberal wave arrives, it will be time to flee. The reason... There will be no need to evade government clutches.
Meanwhile, if BTC is used as an investment and reserve asset, its behavior could be similar if the gold standard returns [see: https://jjplindex.blogspot.com/2023/06/what-could-happen-if-gold-standard.html ]. The volatility and best of its returns could disappear and it could become more like a market index. The underlying idea is: more holders, less volatility because there are fewer participants willing to make quick moves (in most cases); fewer holders, more volatility because fewer participants control the price.
Finally, the chart shows the 9-year annual volatility (bullish & bearish). It seems that these have been falling as BTC becomes popular. Also, higher volatility is linked to bear markets, and vice versa. The question is... What do you think will happen?
The best analysis is yours!
J. Joel Padilla
Copyright: Joel Padilla 2024
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