Now is the winter of our discontent…
Bitcoin’s winter has been rather long. It’s lasted more than 15 months now, and there’s no end in sight to the current bearish market that has made BTC prices by more than 85%. It’s been bitter, dramatic, controversial, disappointing. It’s also been an opportunity to buy cheap while you can.
Why do so? Because the winter will end at some point in the future. We couldn’t even try to guess when that will happen, but it will. BTC has had about five episodes like the current one, and it’s always come back with a vengeance, and we fully expect for that to happen again. The question is: how could that come about? What will trigger Bitcoin’s next big surge? One of the possible answers could take you by surprise
Loss of value
Bitcoin went as high as USD 17.000,00 USD on December 17th, 2017. And from then on, it’s been steadily going down with some irrelevant fluctuations. Its floor has been at USD 3,150 per token, so it’s at 15% of its highest historical value. Those are obviously disturbing news for traders and investors, even for hobbyists.
As stated before, things will improve sooner or later; we just don’t know when or how exactly. But one very unexpected possibility is that the world’s central banks (which are the banks that print money and direct each country’s monetary policy) could decide to buy Bitcoin en masse so they can diversify their wealth storage options and use BTC as digital gold.
In a recent podcast of AltFi, Crypto for Earthling, the research associate and research head at the prestigious London School of Economics (Garrick Hileman) said,
“The main use for bitcoin today is as digital gold,”
Garrick Hileman added,
“The question is though, who will be buying digital gold? If central banks start to accumulate bitcoin, that could be hugely impactful on bitcoin’s price.”
What’s a central bank, anyway?
The central banks of the world are national institutions (except for Europe, in which there is one single central bank for all the countries in the Eurozone) which set the underlying interest rates their currency will pay, they decide how much new money to put (or withdraw) in circulation.
They have power over insane amounts of means (the wealth), and some of them (such as the Bank of England, the European Central Bank, or the U.S Federal Reserve) are among the world’s most influential financial institutions.
For most central banks, the main priority is to keep inflation at bay at all costs, stimulate job creation, and keep the economy growing slowly but steadily (Japan is the exception in this as the country’s money because it’s probably the only place in the world in which deflation is common, which is terrible for the exportation business which accounts for most of its economy).
Central banks have a lot of money to spend. If only a handful of them really start buying cryptocurrencies (and whatever digital asset they could want, chances are they would have to buy BTC first and then exchange it) the demand and trade volume would increase dramatically. We’ll have to wait and see if this prospect becomes a reality.
Image courtesy of Pixabay.
Disclaimer: The presented information is subjected to market condition and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.