Everywhere we see only the front pages of the specialized press, and even the generals, dealing with the crash of cryptocurrencies. Except until then, none of them would dare to provide for the complete dissolution of those assets. It takes more courage to take this step in the face of the challenges posed by cryptocurrencies, these valuable new repositories. Even aces of the economy gathered in Davos during the 2022 edition recognized its value. Otherwise, the current context underlying inflation may prompt reflection on the future of bitcoin and other cryptocurrencies. Because many “enthusiasts” believe that the crash of the crypto market will definitely affect their direction in the years to come.
Cryptocurrencies crash, the stock market and inflation
The world is evil. The Covid-19 crisis has hit recently, other difficulties are accumulating, and those consequences undermine those in control and those in control. Today, we often talk about “hyperinflation”.
The figures put out by the specialists may upset some people. The IMF, for example, made 6% progress, even 9% for developing countries. For troubled countries such as Lebanon, inflation is rising by 3-digits: 211%.
In theory, it would not disturb the insensitive. In the real world, families’ panic is the high cost of basic necessities and energy. To the point of causing street raids as Ecuador is currently doing.
At the root of these crises, we focus on Putin’s war on Ukraine. Unfortunately, this confrontation is affecting the price of fossil fuels that we are currently struggling to get rid of. But other specialists also put forward a theory by which China would have gone to a trade war against Uncle Sam. An employee at Cointribune argued that the central banks are not there for something. The Fed is doing its best to keep the blood.
Provisional assessment: more than 50 countries record inflation above 10% per year.
And this crisis does not stop there. Crypto-currencies pay the cost. Bitcoin, considered its queen, lost 70% of its value in just 18 months. And that makes a great argument for skeptics. Not a day goes by without a sick talking personality or institution for cryptocurrencies. As if they deliberately see falls only in this universe. However, the stock market is also in the red. Did they forget that the Nasdaq recorded a historic 5% drop in early May?
What can bitcoin do against inflation?
At the moment little is understood, bitcoin is the joy of families thirsty for mail from trusted third parties. Those who have long suffered from the high fees of sending and receiving money in cross – border transactions, see it as a march. Its technology Peer to Peer exempt them from paying extra money in such circumstances.
Except that in the crypto universe, yes accommodation, investors who receive in bitcoin a kind of store of value. This gives it a gold-like status, which is considered a safe haven due to its resistance to inflation. Except that some financiers like fund managers and billionaires like Paul Tudor Jones, Bill Miller or Stanley Druckenmiller are starting to abandon gold in favor of bitcoin.
It is estimated that about $ 10 billion has recently been withdrawn from gold funds. What justifies their bitcoin quality as a store of value. In addition, the cryptocurrency created by Satoshi presents itself as a serious adversary of gold: its market capitalization exceeds $ 700 billion and its market share reaches 20% worth of stores.
Admit it, bitcoin is a volatile currency. As it can reach the historical high of $ 69,000, it has experienced historic declines as it currently stands.
So Bitcoin needs a certain level of maturity before it gets the value store status. Or generalized acceptance as such. But lesser investors will be driven by the spirit of correct speculation over time. Wasn’t this the case with the Internet bubble at the turn of the century?
Expect a great revival once it’s embraced. Once institutional investors and specific funds come into play, the situation will change.
Bitcoin, a hope for commercial actors and developing countries?
Bitcoin, a boom for trade
In these troubled times, more relaxed alternatives like bitcoin seem attractive. Already, the war in Ukraine allowed us to validate this thesis because some cryptocurrency donations allowed local governments to better arm their soldiers. On the Russian side, many were rushing to enrich their BTC portfolio to escape the crises associated with the sanctions imposed by the West. To say that the sanctions did not hesitate to cut an inch off their cryptocurrency tap to hurt the Putin regime and even more people.
There was a time when the Russian government itself considered making bitcoin legal. Except that the strongman of the Kremlin is another fish to fry for the moment to the point of taking a step forward and a few steps back when it comes to cryptocurrencies. But it would speed up his dream “ degreased international trade if successful.
We are also talking about CBDCs, central bank digital currencies, to facilitate commercial transactions. The BRI, for example, would like to try it out by launching “Project Dunbar”. The only problem is, it will take even more time to make it effective. And don’t forget that CBDCs are not unanimous among players, especially in the family of cryptocurrencies.
Let’s go back to bitcoin again. Embedding bitcoin qualities like speed and efficiency are sure to boost international trade. These qualities will affect the settlement time for transactions. Thanks to bitcoin, it will bring other benefits to the global financial ecosystem that cannot be listed in some items.
Bitcoin, the savior of volatile economies
As for the fate of developing countries, bitcoin presents itself as a ray of sunshine to seize without hesitation. If we take the case of Lebanon, the rampant hyperinflation in the country could only be reduced by bitcoin. The local currency, more devalued than ever, would not know its former value. If in 2019 the US dollar was equivalent to 1,500 Lebanese pounds, the same currency was equivalent to 35,000 pounds three years later. No savings will be able to find a type of radiation with such a drop.
To say that it made sense for the Argentines to turn to bitcoin against a background of inflation. Because it is very likely that we are only at the beginning.
Other countries like Turkey and Nigeria have already chosen their way of salvation, bitcoin. Like the Nigerian Turkish lira Naira, they have not experienced a strong devaluation recently. After learning the lesson, both Turks and Nigerians are lining their wallets with crypto assets. They know that these are treasures of value. And they also know that bitcoin will free them not only from currency devaluations, but also from the stranglehold of financial institutions on access to foreign currencies.
We will stop there for a while. There are many reasons to take bitcoin as a store of value. As we publish, you are sure to see more clearly. In any case, we see more and more people, or countries, targeting cryptocurrencies to better address the upcoming crises and inflation. And if many skeptics in bitcoin see nothing but “junk” or “pyramid scheme”, they know how much our economy is collapsing, then more bitcoin will be revisited as Phoenix despite the current crisis. still present. Time will tell that his revival was motivated by growing interest on both sides of the world and belief in a better world.
Source: Les Echos; VentureBeat
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Mikaia ANDRIAMAHAZOARIMANANA
The blockchain and crypto revolution is underway! And on the day when the impacts on the most vulnerable economy in this World are felt, against all odds, I will say that I was involved.
