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New Report Covers Key Trends That Should Propel The Bitcoin Price Higher – Forbes


A new report from digital asset research firm Delphi Digital describes current trends in the global economy that could lead to a “perfect storm” for the Bitcoin price. Notably, Delphi Digital’s May Bitcoin Outlook report indicated a return of a bull market in Bitcoin right before the price more than doubled over the next two months.

According to this latest report from Delphi Digital, factors such as monetary easing and the potential for an economic downturn in the near future have made the “digital gold” narrative around Bitcoin more relevant than ever. However, it’s also unknown exactly what would happen with the Bitcoin price if a global recession were to occur.

This new Delphi Digital report follows a claim from Pantera CEO Dan Morehead that there’s a “good shot” the Bitcoin price will reach $42,000 in 2019.

Monetary Easing

Monetary easing is discussed in the report as perhaps the most important macroeconomic factor that will affect the Bitcoin price.

“First, and arguably most important, sentiment from global central banks took a drastic turn towards more dovish monetary policies,” says the report. “The Fed, ECB, BOJ, PBOC, and many others are now preparing market participants for more rate cuts and additional stimulus measures as they attempt to keep the current economic expansion going.”

Rationales for monetary easing listed in the report include: the ongoing trade war between the U.S. and China, risks related to a no-deal Brexit at the end of October, and tepid GDP growth in Germany.

“The rising risk of currency devaluation, especially among reserve currencies, is a longer-term catalyst that should propel BTC higher along with gold,” claims the report.

During his time in office, U.S. President Donald Trump has been strongly pushing for a devaluation of the U.S. dollar, among other policies that help illustrate Bitcoin’s value and utility.

An Inevitable Economic Slowdown

According to the Delphi Digital report, there are also indications that a global economic slowdown could be around the corner, which would create a greater incentive for central banks to lower interest rates and use other forms of economic stimulus.

“The global slowdown everyone feared was on the horizon has begun to show up in the economic data as well,” says the report. “Global PMIs, GDP growth forecasts, and inflation expectations are all trending lower, which helps support the case for looser monetary policy. Increased stimulus measures are likely to get more extreme this time around given the already low starting point for short-term interest rates.”

As the report points out, the New York Fed’s own data puts the chances of a recession in the United States within the next twelve months at roughly 30%. This is the highest probability measured by the New York Fed in more than a decade.

According to Delphi Digital, Bitcoin’s positive price performance in 2019 has been due to the prospect of the crypto asset acting as a “digital gold” in a situation where the world’s major fiat currencies are further devalued during an economic downturn.

“A key reason behind Bitcoin’s outperformance in recent months is the strengthening narrative around its value proposition as ‘digital gold,’” says the report. “The macro backdrop that’s emerging is the perfect storm for Bitcoin to thrive as it has the potential to benefit from both secular and cyclical trends in the coming years.”

Although the report notes that the U.S. dollar may not weaken over the short term, Delphi Digital does see the continually rising national debt as a key indicator to watch in the coming years.

“[The] idea that we can keep digging a deeper debt hole with no end in sight is naive in my view,” says the report. “If foreign holders of U.S. treasuries lose faith in the viability of repayment, then sentiment towards the dollar will shift drastically. This is not going to happen overnight, but the gradual shift away from the dollar as the global reserve currency is a long-term threat to its strength. Look no further than the recent Congressional hearings on Libra to see why policymakers are so intent on keeping the status quo when it comes to the dollar’s influence.”

While some have argued that a ban on Bitcoin could prevent it from acting as a hedge against a potential devaluation of the U.S. dollar, multiple members of Congress have made it known that they don’t think they would be able to implement such a policy.

Bitcoin or Gold?

While gold has been known to act as a safe haven asset in the past, questions remain as to how Bitcoin would perform during a recession.

“Bitcoin was forged in the depths of the Great Recession over a decade ago and, therefore, lacks historical precedent,” notes the report from Delphi Digital.

That said, the report also indicates that the relatively small size of the Bitcoin market could make it an attractive option for investors looking for larger returns.

“Longer-term, we are strong proponents of the ‘digital gold’ narrative for Bitcoin that continues to gain relevance amid extreme monetary policies and rising geopolitical tensions,” says the report. “However, the relative size of Bitcoin’s market value compared to the investible gold market, for example, makes it a tempting opportunity for investors starving for assets with above-average growth potential as well.”

The report adds that the total investible Bitcoin market may eventually grow even larger than the investible gold market over time.

“There are only a handful of assets that largely sit outside the purview of any single government, so the demand for such non-sovereign assets could be even greater in the decades to come depending on how the effects of unconventional monetary policy shake out,” says the report.

Blockchain Capital’s Spencer Bogart also recently noted that Bitcoin’s potential for disruption is much larger than the $8 trillion worth of gold in the world during an interview with Bloomberg.



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