The old wisdom that Bitcoin can simply weather any external economic malady is fast fading, with some experts increasingly including macro economic events in their Bitcoin forecasts.
Focuses have shifted to the “dollar shortage,” which some traders are blaming the current Bitcoin price woes on, as well as the trade war being waged by the Trump administration with China.
While there are a number of complex factors that go into the value of Bitcoin, one that rules all of them is demand. For whatever reason, people have recently lost interest in BTC, and it’s not strictly related to the negative price action.
Bitcoin’s Bound To Bounce…
People who surround themselves with crypto Twitter personalities and a constant stream of blockchain information might not be aware that Bitcoin, to the outside observer, is as boring as it is confusing. In order for newcomers to get excited, they’ll need to understand it from a selfish perspective: how it can empower them in their daily lives.
Simply earning money on an appreciating asset isn’t necessarily an exciting prospect. Many people do that successfully, with far less risk, buying real estate.
Analysts believe that the worse the current dollar shortage gets, the better Bitcoin’s chances as a hedge asset become. While central banks including China have recently been turning to gold as a way to anchor their considerable portfolio, individual traders may get hold of Bitcoin, assuming it will perform along a similar track.
…But It Has To Fall Hard First
Regular stock traders and other traditional financial workers getting into Bitcoin for this reason will likely lead to some cross-pollination — traders will become more interested in crypto assets out of necessity.
The theory rests on the notion that the “dollar shortage” continues. If history is any lesson, the Federal Reserve won’t shy away from printing a few trillion more dollars if it deems it necessary, and the markets won’t be bothered to gobble them right up.