In the document, titled “Quantitative Tightening”, the world’s largest digital currency asset manager warned that unlimited fiat money supply risks “debasement” of the U.S. dollar.
Bitcoin is now investors’ best bet against central bank money printing, a new report from asset manager Grayscale concludes.
Grayscale: gold safe-haven role “antiquated”
BTC, the largest cryptocurrency, is an ideal safe haven, its technical prowess setting aside from gold, fiat and government bonds.
“Untenable levels of debt and fears of widespread default are driving the most aggressive monetary policies since Bitcoin’s creation”, the report concludes.
Fiat currencies are at risk of debasement, government bonds reflect low or negative real yields, and delivery issues highlight gold’s antiquated role as a safe haven. There are limited options to hedge in an environment characterized by uncertainty.
Its title is another term coined to describe the effect of Bitcoin’s upcoming block reward halving in around two weeks.
Whereas central banks are engaging in now unlimited quantitative easing, or QE, Bitcoin’s supply is cutting in half. Other sources call this juxtaposition “quantitative hardening”, referring to Bitcoin’s status as “hard” money versus fiat as “easy money.”
“Bitcoin is showing signs of becoming a safe haven while maintaining an asymmetric return profile”, Grayscale’s conclusion summarizes.
And while the world is seemingly challenging every notion of what is possible, it’s time to challenge another one – that fiat currencies will retain their value. It’s time to pay attention to Bitcoin.
Tide turns on central bank acceptance
As Cointelegraph reported, Grayscale has fared well despite the huge panic caused by coronavirus in March. The company now has $3 billion in assets under management, while earlier this month, it emerged that it now controls 1.7% of the entire Bitcoin supply.
The report barely holds back in its thinly-veiled criticism of central bank policy. Investors, it says, should “understand the effects of government monetary and fiscal intervention.”
That language echoes some of Bitcoin’s best-known supporters, including Saifedean Ammous, who extensively addresses fiat weakness in his popular book, “The Bitcoin Standard.”
Speaking on the latest episode of financial news show the Keiser Report, meanwhile, Max Keiser reiterated that as a society, “you can’t print your way to prosperity.”
Bullish? Popular Bitcoin Metric Ends Record 7 Weeks of ‘Extreme Fear’
Bitcoin bulls have a reason to celebrate as a classic indicator is emerging from the longest hyper-bearish phase in its history.
According to data last updated on April 27, the Crypto Fear & Greed Index has exited its lowest possible reading – “extreme fear” – after seven weeks.
Who’s afraid of the big bad bear?
A record since the indicator began in 2018, the event underscores the impact that coronavirus fears have had on cryptocurrency markets.
The Fear & Greed index is a number from 1 to 100 which analysts form from a basket of factors including volatility, market volume and social media activity.
The higher towards 100 the reading is, the more wary investors should be, as it implies markets are overenthusiastic and are likely to catch up with themselves.
“With our Fear and Greed Index, we try to save you from your own emotional overreactions”, the tool’s creators summarize on its official website.
At press time on Monday, the Index measured 28, regarded as “fear”, up from 21 the day before. Comparatively, the corresponding metric for traditional markets and stocks is currently at 40, also “fear.”
Bitcoin’s inbuilt damage control
Fear & Greed forms just one of the positive signs greeting Bitcoin investors this week.
As Cointelegraph reported, strong technical fundamentals have also returned, complementing a price surge of 10% which took many by surprise late last week.
As such, Bitcoin has succeeded in reversing the negative consequences of coronavirus, unlike fiat without requiring any external intervention.
Attention now focuses on the upcoming block reward halving, arguably the most eagerly-awaited in Bitcoin’s history.