While COVID-19 has made headlines across the globe, within the Bitcoin community, halving has taken center stage. Before the world fell into social and economic turmoil, the price of BTC had rebounded remarkably since its end of 2019. The chorus of bullish voices grew stronger and more persuasive: Bitcoin as a rare asset would see its price skyrocket, some even estimated at over $ 100K.
However, the 'Black Thursday' events on March 12, where the stock market sell-off spread to crypto markets saw BTC drop to as low as $ 3,867 shaking the faith of those who cling to the narrative of the safe haven. After all, BTC has traditionally performed well when the stock markets are down and global macro factors are uncertain. However, the correlation between the markets was undeniable, showing that investor confidence had been affected across the board as they fled to liquidate their assets.
However, since then, many interesting patterns have occurred. BTC has begun to decouple from the stock market once again. As the stock markets cThey continued nervous during March and April before recovering, the markets of cryptocurrencies they began to rise constantly. BTC tripled its price, and proponents of a strong ascension after halving raised their rhetoric once again, claiming that BTC had regained refuge status.
Settlement pressure around the halving
While there certainly are many signs to suggest that Bitcoin is starting to demonstrate its status as an asset haven, it still has a long way to go. Gold has been a hedge for investors for centuries, bitcoin has only been around for 11 years. Furthermore, the effects of this global pandemic of coronavirus they could be even worse than the Great Depression of 1929. Unemployment in the United States alone is already close to 15% and the crisis is still in its early days.
No market can escape such a cascade of unemployment, fear and economic decline. Bitcoin has shown strong price resistance in such a rigid context, however the fact is that halving Bitcoin is a double-edged sword right now for the number one cryptocurrency. With a halved block reward and a BTC price battered by global macro events, smaller-scale miners were always likely to leave the game and this would be followed by liquidation pressure.
Still, BTC, in comparison to other traditional high-risk investments such as stocks and currencies, remains firm.
Trillion Dollar Stimulus Printing
Governments around the world have pledged to do "whatever it takes" to save the economy from the COVID-19 crisis. However, history has shown that uncontrolled money printing and money supply inflation can lead to the ultimate collapse of countries' economies. By creating trillions of dollars in stimulus packages to fight the coronavirus, governments seriously risk degrading their confidence and their currencies.
Not only are we living in a time when we might see widespread defaults and high inflation, but we are also beginning to see ordinary people question money creation. After all, if governments can simply print money at will, why the need for austerity, cuts, or even paying taxes?
Experienced investors in traditional markets understand better than anyone else the precarious equity situation right now, as well as the world of complications about to fall into government fiat. COVID-19 has plunged the world economy into a depression.
In fact, most central banks have been considering alternative non-monetary asset classes. Although gold and raw materials have always been a welcoming option in the traditional market, they could be limiting to cover the risk during the global closing initiated by COVID-19, especially in the stock market.
Bitcoin as an alternative asset
BTC becomes an alternative solution in terms of coverage, especially in the face of the economic problems generated by the pandemic. While it also has its limitations, in terms of the channels that allow cryptocurrency trading, this is perhaps the best opportunity for BTC to be heard.
In a global crisis of such magnitude, this is the kind of backdrop against which we can see BTC flourish in the long term, as it proves its worth to investors. In fact, infamous macro investors like Paul Tudor Jones are now buying bitcoin to protect themselves against the inflation they see will arise from the printing of money from the central bank. The genie is already out of the bottle.
Traditional investors can no longer ignore the need to at least consider including Bitcoin in their portfolios. In an era when money is rapidly losing value, stock markets are artificially inflated, and commodities like oil have fallen off a cliff, BTC has emerged as an alternative.
Investors with enough vision will understand that BTC is a long game. Those who can handle the marketing noise surrounding halving and short-term mass selling pressure will understand that in a changing world, the face of investment is also changing. For use the words From Tudor Jones, everyone will want a chance to own the "fastest horse" in this race.