Since the bear market in 2018, investors have been trying to find out exactly what can make Bitcoin re-emerge. According to industry research firm Delphi Digital, although many authorities believe that digital assets are not related to traditional financial systems, the slowdown in the macro economy may bring good news to the rise of the cryptocurrency market.
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Bitcoin or attract investors seeking high returns
According to Delphi Digital's latest report, the potential increase in growth investment strategies (investing in growth assets to maximize capital gains) can help bitcoin rise in the coming months and years. Delphi analysts explain that growth-centric investors' favorite choices typically include stock combinations of FAANG (Facebook, Amazon, Apple, Netflix, and Google) and other popular Silicon Valley companies.
The reason for this is that we are currently in a period of slow economic growth, and that US Treasury yields are very low, and growth stocks generally outperform other stocks. Although bitcoin has higher risks, the potential for price growth is very large and it is a high-risk “growth” asset. Therefore, Delphi concluded that:
“Considering the global economic slowdown and weak corporate income expectations, it is good for growth assets to outperform the market. If this is the case, as investors look for assets with higher risk but significant price appreciation potential, Bitcoin May attract their attention."
Source: Delphi Digital
Why is bitcoin a good prospect in the long run?
Delphi researchers are not the first to claim that macroeconomic factors may drive bitcoin growth in the coming months. Previously, Brendan Bernstein, founding partner of industry investment firm Tetras Capital, explained why he believes BTC's long-term prospects are healthy.
He said that the quantitative easing (QE) strategy adopted by the Federal Reserve Board over the past decade has contributed to the growth of BTC.
While quantitative easing (fiscal policy, central bank buying assets to stimulate the economy) can be a positive catalyst for cryptocurrency for most of the past decade, some fear that the economy may increase risk (asset inflation, fiscal instability) ,and many more). Bernstein is concerned that due to the excessive use of quantitative easing, the economy may be in a bad situation, which may allow BTC to achieve price increases as an unrelated value store.
Bernstein believes that macroeconomic and political factors may allow decentralized digital currencies by drawing attention to democratic socialism, modern monetary theory, growing retirees with limited financial knowledge, and rapidly expanding US sovereign debt. Opportunities go beyond legal tender. All of this, coupled with quantitative easing, is why there is a “BTC Perfect Storm” right away.