The main driver of Bitcoin's growth in the coming year will not be the policy of abundant stimulation of the economy conducted by the Fed, but inflation. And although many do not see real inflation in the United States, it is growing rapidly in the rest of the world.
Alex Gladstein, chief strategic director of the Foundation for Human Rights, said that 1.2 billion of the world's citizens live in inflation that reaches two to three digits.
Inflation is the silent killer of human purchasing power.
Over the past week, a number of analysts and economists have discussed a possible rise in US inflation, mainly due to the huge volumes of stimulus created in 2020 and 2021. This has led economists to believe that inflation will soon come to the US as the Federal Reserve is cornered by plans to keep the easy money schemes for 2021.
The biggest sell-off of US government bonds in recent history is a direct harbinger of inflation. And although the yield on 10-year US Treasury bonds rose from 0.9% to 1.6%, this cannot suit investors watching how the stock market and the bitcoin market grow. It even "led to the worst quarter for Treasury investors in more than four years," according to Ice Data Services.
Bob Prince, the hedge fund manager of the Bridgewater Associates, warned that the recent sell-off in the US government bond market could accelerate and it could “threaten high-yielding assets” such as cryptocurrencies and companies with negative earnings.
However, more than 1.2 billion people living in countries with double-digit inflation do not have access to high-quality assets, but they have easy access to one global asset that does not require special knowledge or licenses. And this asset is bitcoin. People simply have nowhere to go, no one agitates them to buy bitcoin. They are forced to do it.
If the fears of Ice Data Services analysts and large institutional investors come true, and the sale of American Treasuries continues in the current quarter, then it will be very difficult to avoid inflation in the US. In this case, large American investors will simply have nowhere to go. They will be forced to hedge the risks of depreciating Bitcoin assets.
Another important indirect confirmation of the real threat of inflation is the position of the main economic media. In particular, Bloomberg Economics editor Peter Coy wrote an editorial titled "Tune Out the Hyperinflation Hype", portraying investor concerns as "hype" and manifestation of "conspiracy theory." Coy even noted that fear of inflation only helps drive the price of BTC. A number of other media outlets, as if on cue, have released similar articles claiming that the fear of inflation is all fiction and conspiracy theories.
However, according to the latest Bank of America (BoA) poll, which surveyed 220 fund managers with more than $ 630 billion in assets, “inflation” is the largest risk for the markets, outweighing all other risks, including Covid-19.
When doing a fundamental analysis of Bitcoin price movements in the first half of 2021, you should first look at two things: the sale of American Treasuries and the real inflation rate in the United States. There are the answers to the question about the next peaks in the price of bitcoin.
