Thanks to the monetary policies of Ben Bernanke and Janet Yellen, in the US there are concurrent bubbles in all of the traditional asset classes (stocks, real estate, and bonds) . The artificially low interest rates due to central planning have resulted in a gross mis-allocation of capital. A reset is inevitable and in my opinion, desirable. When those bubbles burst and the money flees those assets, where will the money go?
Initially the money will flow into the traditional safe havens - mostly $USD and some gold. Some money will also go into bitcoin at this time, as hedge fund managers and other financial “experts” are already extolling the virtues of bitcoin as a safe haven.
As the crash of traditional financial assets intensifies, the central banks will respond by doing the only thing they know how to do - print more money. This will prompt investors to flee $USD as well. Where will all that money go?
Real estate? No, its crashing.
Stocks? No, they’re getting obliterated.
Bonds? Possibly to front-run the Fed, but yields are so low already there isn’t much upside.
Gold? Definitely! Gold is real money - money that government can’t just print an infinite amount of like they can with fiat money.
Bitcoin? Now we’re talking.
Bitcoin is real money and there is a finite supply which allows it to naturally gain value vs fiat currencies as they inflate their money supply. Bitcoin is a store of value like gold, but has far more utility.
Bitcoin has a reputation for being a volatile and risky investment, but investors will have seen their “safe” investments obliterated while Bitcoin is continuously making new highs. At this point, Bitcoin will seem like a relatively safe investment. In fact, as the rotation from traditional assets into Bitcoin intensifies, Bitcoin will likely be touted by the mainstream media and financial press as the safest investment, and the best way to protect against the financial downturn.
As the financial downturn progresses, some countries will experience currency crises and may be forced to adopt Bitcoin as their official currency. If that happens, central banks will also start buying bitcoins as part of their reserve. Sovereign wealth funds may also start buying bitcoins as part of their asset allocation. Once governments start to embrace and legitimize bitcoin, the masses will rush to get in and cause the price to skyrocket.
So how high can Bitcoin go?
This is impossible to predict, but I’ll give my thoughts on how high it could potentially go. Markets tend to overshoot, and I expect Bitcoin and other cryptocurrencies to become wildly overvalued before the cyclical bull market ends. At the peak of the upcoming cryptocurrency bubble its valuation could reach or exceed that of gold. The total value of all gold ever mined is worth about $7 trillion. If we make an assumption that Bitcoin will make up approximately 25% of cryptocurrency market cap, we get an estimated value of over $100,000 per bitcoin.
The only thing that many fail and forget about the Fundementals which holds "All Cryptoverse Players together"...is the supporting trade currency that gives *<ALL CRYPTO CURRENCIES its base valuations and trade...the USD$$$>. Pray REALLY HARD that the USD doesn't go into Hyperinflation mode as it would then mean that the "Valuations of all the Cryptos" will be stuck in the Cryptoverse.
There's already a live test case of how a (Hyperinflated) Collapsed Nation's Currency could effect the pricing of #Bitcoin and all #Alt-coins...#Venezuela.
Yes! Its currently still a Transactable Currency that hold some form of Intrinsic value...but being a Non-Tangible asset...it would be a great challenge to theoretically prove that it has any value when and if the Financial Reset occurs. I'm sincerely worried about it myself as I've vested interest in this realm of investment as well.
All you have to do to understand what and why I am concerned is to just add in *<> parameters into your logically published article above.
It's highly unlikely that there will be hyperinflation in the US in the near term, but if that happened it would be the most bullish event possible for crypto. The US Dollar is the reserve currency in the world. If it were to lose that status due to hyperinflation, the world would need a new reserve currency to take its place -- one that is decentralized and has a low inflation rate. Know of one that might fit the bill?
Gold and silver.
We've either had a vulcan mind meld or you're reading my mind.
worldwide catastrophes? financial meldown? Cryptocurrencies the godsend for a world thrown into chaos? Scary... :)
Yep, but, not everyone can see it.
the future is bright the future is crypto
When Janet Yellen makes the statement that there will not be another financial crisis in our lifetime it's time to prepare for the worst. Go to your underground bunkers everyone.
Yeah that was a really curious statement. Perhaps her lifetime, but to assume we're not going to face another possible financial crisis in the near future is ignoring history and ignoring present day concerns. Not very responsible for someone in her position
Not responsible at all. Of course politicians will put a positive spin on everything even if they don't believe it privately.
Couldn't agree more....
Bitcoin is getting low - Can you start this financial reset now? :)
I'd love to but it's up to Yellen. One more rate hike should start the race for the exits.
What about Ether? i got most of my money invested in Ethereum :D
Ethereum is the reason why I'm only estimating Bitcoin to be 25% of cryptocurrency market cap. Ethereum will likely be a large chunk of the remainder. I only wrote about Bitcoin in this article because I think Bitcoin will be more directly impacted by the financial reset. There are myriad other reasons why I'm bullish on Ethereum.
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Logically I can see where you're going here. Certainly If/when the next financial crisis takes form because of the need to "reset" as you've stated, it's certainly quite possible to see a chunk of that come here to the crypto space.
Bitcoin overtaking Gold overall? Wow.. now that's a true Flippening unlike anything else. Possible, but, we would need a real push into the mainstream with snake-oil salesmen pitching everywhere to Grandma on television, radio, and newspaper about how Bitcoin is the godsend for wealth creation... and then grandma falling for it (poor Grandma)
We've got a few years to go yet before any of this could happen, but what a time we live in to see where this could be a legitimate path forward.