The economic crisis that many economists have been waiting for months for is finally starting. The coronavirus, and its rapid spread around the world, will have simply acted as a catalyst in the sharp fall in the financial markets that we have been witnessing since March 9, 2020. Sooner or later, these financial markets, artificially inflated by central bank monetary creation and low interest rates, were bound to collapse.
This economic crisis that is taking hold causes panic in the majority of people. In times of collective panic such as the one we are currently experiencing, the number one priority for 99% of people is to recover as much cash as possible.
Logically, we are therefore witnessing a liquidity crisis which is having a strong impact on all the liquid markets on the planet. On Wall Street, the Dow Jones has lost more than 20% of its value in the past 10 days. For a month, the fall of the Dow Jones is more than 30%. The S&P 500 also undergoes the same correction.
Elsewhere in the world, the situation is exactly the same. Safe haven par excellence for several centuries, gold itself lost more than 10% last weekend. Under these conditions, the price of Bitcoin also drops. It could not be otherwise. Bitcoin is a liquid market. Bitcoin is even the only real free market in the world.
In case of panic, there is no longer a safe haven
Even when it loses $ 60 billion in capitalization in a matter of hours, Bitcoin continues to work to allow users to find the break-even price for themselves.
Some opponents of Bitcoin hasten to draw two conclusions, false in my opinion, following this drop in the price of Bitcoin:
- Bitcoin would not be a real safe haven in times of crisis.
- Bitcoin is an asset correlated to gold, or the financial markets.
In my opinion, one cannot draw such conclusions over such a short period. The safe haven status of an asset can only be measured over the long term. Likewise, the possible correlation of Bitcoin with other assets can only be analyzed over a period of 5 days.
These opponents of Bitcoin therefore need to review their copy, and to climb up to see the whole picture.
By taking height, they will be able to understand that if the price of Bitcoin has changed, its fundamentals on the other hand remain the same. The fundamentals of Bitcoin as of March 21, 2020 are the same as those of Bitcoin on March 1, 2020.
And the fundamentals of Bitcoin remain excellent which always makes me optimistic about the future of Bitcoin.
Bitcoin is still as rare
Bitcoin price has gone up from $ 9K to $ 4K in a few hours over the past week. As of this writing, its price has now risen above $ 6K. The situation is chaotic, and the ambient panic that has set in could cause its price to drop further below $ 5K.
However, whatever its current price, Bitcoin remains as rare as ever.
Bitcoin is still the rarest decentralized invention ever created by man. Whatever happens, Bitcoin will not change the maximum supply that can be put into circulation.
There is no leader in the world of Bitcoin which may change the fact that the maximum number of Bitcoin is 21 million.
When the crisis has set in, minds will calm down, and people will go to safe haven values. Gold, and the Bitcoin, will resume their role as safe haven. The price of Bitcoin will go up again, and those who seized the opportunity of Bitcoin at $ 4K or $ 5K will be greatly rewarded.
As always with Bitcoin, to take full advantage of it, you will need to have total confidence in its revolution.
Bitcoiners can do it. On your side, is this the case? You are the only one who can answer this question and make the best decision for your future.
Bitcoin monetary policy is still unique
Bitcoin was created by Satoshi Nakamoto at the end of 2008 in response to the banking and financial crisis that had just happened. Well aware that the monetary and financial system had reached its limits, Satoshi Nakamoto decided to launch the Bitcoin experiment officially on January 3, 2009 with the following message within the genesis block:
The Times 03 / Jan / 2009 Chancellor on brink of second bailout for banks
You can therefore consider that Bitcoin was created, precisely for the situation that we will live in the weeks and months to come.
Bitcoin should be seen as the only credible alternative to the current system. It is your best chance to escape the gradual collapse of this system.
By creating Bitcoin, Satoshi Nakamoto made his behavior simulate that of a commodity such as gold. So, the more time passes, the more difficult it becomes to create new Bitcoins.
The creation of new Bitcoins is cut in half for every 210,000 transaction blocks added to its Blockchain.
Originally, 50 BTC were created for each block of transactions added to the Bitcoin Blockchain. Today, only 12.5 BTC are created. In May 2020, the third halving of Bitcoin history will take place. After this third Halving, only 6.25 BTC will be created for each block added.
The daily creation of new Bitcoins will pass from 1800 to 900 in what will constitute a real monetary shock on the Bitcoin supply. This monetary shock to lead in fine a strong increase in demand for Bitcoin which will encourage the increase in its price.
This unique monetary policy is the great strength of Bitcoin compared to the current monetary and financial system. After this third Bitcoin Halving, annual inflation of the Bitcoin supply will drop below 2% to 1.8%.
In the future, the annual inflation of the Bitcoin supply will tend to zero to reach this point in 2140 when all the Bitcoins are in circulation.
This unique monetary policy protects what you own. It offers you an extraordinary guarantee on your future. It is still relevant today when the Federal Reserve has just decided to inject more than $ 700 billion into American banks.
The Federal Reserve would have many lessons to learn from how Bitcoin works, in my opinion.
Bitcoin network still remains fully decentralized and leaderless
At the heart of the crisis, Bitcoin still remains the most decentralized payment network in the world. Anyone can join the Bitcoin Blockchain to become a network node. Bitcoin blockchain is still permissionless and trustless.
No leader at the head of Bitcoin can prevent you, arbitrarily, from joining the network.
In the Bitcoin world, all users have the same importance. All of this makes Bitcoin resistant to attempts by the powerful in the current system to stop it. There is no one to sue in an attempt to stop Bitcoin.
No one can stop you from using your Bitcoin wealth As you wish. The transactions you decide to make cannot be censored by a third party.
At any time, you can decide to sell all of your Bitcoins if you wish.
It is for this reason that Bitcoin saw its price drop so significantly on March 12, 2020, going from $ 8K to $ 4K. Bitcoin works continuously by letting its users decide its break-even price.
Again on this point, Bitcoin shows its superiority on Wall Street which constantly suspends trade as soon as stock prices fall too sharply.
The behavior of Wall Street on this point approaching much more socialism than the doctrines of capitalism that the institution is supposed to represent.
Bitcoin is the only real free market in the world.
This basic truth has been further demonstrated in the past few days, and it explains why the price of Bitcoin has been so volatile.
Bitcoin is the most secure decentralized network in the world
In just over eleven years of existence, the Bitcoin network has never been hacked. Bitcoin security could never have been compromised. It’s pretty incredible when you think about it, because hackers around the world have been constantly trying to attack Bitcoin.
However, Bitcoin has always stood firm. The hacks that took place in the world of Bitcoin have only affected the weakest links: trading platforms and users.
Since its creation, Bitcoin has displayed an uptime of 99.98%. A figure that has nothing to envy to the uptimes of web giants like Google, Amazon or Facebook.
However, Bitcoin works in a secure manner only thanks to the pooling of the computing power of its users. These people believe so much in Bitcoin and its future that they always increase the computing power that they make available to the network.
At the beginning of 2020, the Hash Rate of Bitcoin has reached a historic record beyond 130 TH / s.
The drop in the price of Bitcoin, and the widespread panic that set in, caused drop this hash rate, but the network still displays a Hash Rate close to 90 TH / s.
Bitcoin therefore remains the most secure decentralized network in the world right in the heart of the crisis.
Finally, you will notice that the situation in the Bitcoin world has improved enormously since the end of 2017. While the network had been greatly slowed down following the huge increase in transaction volumes at the time, this time in in the heart of the storm, the Bitcoin network was able to absorb a large spike in transactions without any slowdown.
Bitcoin continues to progress as the current episode shows.
Bitcoin always belongs to everyone
The high volatility of the price of Bitcoin over the past week is there to remind us that Bitcoin always belongs to everyone. Everyone was free to sell their Bitcoins as they saw fit.
When Bitcoin lost 50% of its value in a few hours, the trading continued.
At the same time, Wall Street stops trading 15 minutes as soon as the decline in stocks exceeds 7%. This circuit-breaker has been applied several times since the liquidity crisis hit the liquid markets.
This shows you that Wall Street is not a real free market. Wall street belongs to some all powerful who seek at all costs to protect their interests.
To do this, all means are good. As soon as the market does not follow and begins to fall, Wall Street calls on the Federal Reserve to continue to artificially support the current system.
The Federal Reserve uses the weapon of monetary stimulus so much that the effects are less and less perceptible.
The fall in interest rates by 100 basis points urgently decided on March 15, 2020 by the Federal Reserve, which is accompanied by a quantitative easing as well as lowering the bank reserve requirement to zero, even appears to have been rejected by Wall Street.
Again, Bitcoin stands out from the current system by staying strong on its fundamentals.
The price of Bitcoin lost more than 50% on March 12, 2020 at the height of the liquidity crisis we are going through. Many people have lost faith in Bitcoin, and have preferred to capitulate. It was clearly not Bitcoiners who could fully benefit from the Bitcoin revolution in the future.
Real Bitcoiners always reveal themselves at the height of a strong bear market. This is the case again today. True Bitcoiners rely on the fundamentals of Bitcoin, which remain excellent, to keep an unshakable faith in its revolution.
If the price of Bitcoin has indeed changed in the last few days, its fundamentals have not changed, which implies why the current price of Bitcoin must be seen as a unique opportunity in my opinion.
A developer by training, I discovered Bitcoin in 2014 but I did not immediately understand the importance it could have for the world of tomorrow. I got into it more deeply from the start of 2017 and since then I haven’t given up on the business.
Passionate about Bitcoin and the new system it is trying to build for the future, I decided to participate in its evangelism at my modest level by writing on Bitcoin, Blockchain and crypto currencies on different supports.
It is with pleasure that I publish some of my texts in French on The Coin Tribune.
I also write a lot about personal development and self-improvement.
Do not hesitate to exchange with me via social networks or in comments on my articles if you have questions about my articles.