COVID-19 has the world suffers, but the crypto world, especially Bitcoin, has benefited from it. When most of the traditional assets are down because of the economy, cryptocurrencies prove their worth as a hedge asset. Two months after the March crash, Bitcoin has already taken back lost grounds, now testing the $10,000 mark. But the positive impact of the COVID-19 on Bitcoin doesnt stop here, another bull factor is coming – unlimited QE.
With unlimited quantitative easing plan, comes an exploding money supply. So much money will flow into all kinds of channels and jumpstart the economy, and thats what governments are aiming for. But the excessive money in the market will also gradually leads to inflation, so each unit of currency buys fewer goods and services. With the U.S. leading the QE, and European countries following suit, people may one day find the money in their pocket shed some of its value.
Unlike the fiat, Bitcoin just experienced its quantitative hardening two weeks ago. The third halving of Bitcoin has cut its issuance into a half, so its inflation rate remains around 1.8% until the fourth halving. The store-of-value nature of Bitcoin has already been recognized in some countries facing hyperinflation. Venezuela, who seems to has abandoned its cryptocurrency the petro, will allow shops and enterprises to settle payment via Bitcoin in June. Iran has started to adopt Bitcoin into its monetary system by granting over 1,000 cryptocurrency mining licenses and launching a national blockchain project called Borna.
Just on the day of the third halving, Donal Trump twittered that the U.S. could use some negative interest rates. While people get to pay lower mortgage rates or loan rates, yields on saving accounts and financial products are likely to decrease or even crushed.
In a tweet, Peter Schiff warns Trump about the disadvantages of negative interest rates: But the inflation created to make negative rates possible will hurt wage earners too, plus the overall economy will be less ...