After the crisis, where is the Bitcoin price opportunity in 2020?

Author: Kyle Torpey

Translator: Moni

Source: Planet Daily

Chamath Palihapitiya, a former Facebook executive and the current CEO of Social Capital, is an “old cannon” in the cryptocurrency industry and one of the earliest bitcoin investors. In 2013, he bought many cryptocurrencies— You know, the price of each bitcoin was less than $ 80. Chamath Palihapitiya had confidently revealed that he had a 5% Bitcoin monetary base at a certain moment.

In a recent discussion with Morgan Creek Digital partner Anthony Pompliano, Chamath Palihapitiya shared his views on the current state of the global economy and also talked about the strategies and options adopted by different countries to bring the economy back on track. Not only that, but Chamath Palihapitiya also focused on analyzing why bitcoin can remain “sturdy” during the 2020 recession.

Although Chamath Palihapitiya admits that Bitcoin has not been adopted on a large scale at this stage, at least in the past few months, Bitcoin has played a role as a global reserve currency to a certain extent, and the chances of future success have also increased.

Bitcoin's current price volatility remains high

In the context of the global economic turmoil, Chamath Palihapitiya believes that Bitcoin may not be ready for the golden age, he explained:

"Bitcoin is still a speculative tool, at least compared to reliability, bitcoin speculative nature is more. Assuming that you want bitcoin to replace fiat currency, you can do bitcoin volatility and dollar volatility. Comparing this, you will find that the US dollar is still irreplaceable. The current volatility of Bitcoin proves that it will not work as a legal currency. "

Chamath Palihapitiya added that one of the biggest advantages of traditional fiat currency is its relative stability. This feature has also become one of the important pillars in the operation of enterprises today. He believes that the fundamental reason for Bitcoin's further volatility when it is highly volatile, he said:

"Extreme volatility will only push bitcoin to short-term traders and speculators, and this is where we are now, we are really stuck in a slum."

According to Chamath Palihapitiya, short-term traders and investors must be made clear so that Bitcoin can get rid of the volatility and walk out of the “asset slums”. In addition, Bitcoin also needs to guarantee the interests of long-term holders and avoid the risk of inward collapse of traditional financial infrastructure.

Bitcoin price opportunities in 2020

According to Chamath Palihapitiya's analysis, there is good news for bitcoin holders: Compared with a few months ago, the current traditional financial system is much more vulnerable, he said:

"We are moving slowly, but the destination is a cliff, and then our speed will become fast, because then we are falling along the cliffs and landslides, and finally we will be welcomed by a huge brick wall. "

Chamath Palihapitiya said that once the global economy is in trouble, almost every government in the world has to choose between inflation (and the elimination of inefficiencies in economic operations) and economic deterioration. So, what if we rely on Bitcoin from now on? In fact, if the economy really degenerates, Bitcoin can at least be seen as a "resistance" to ensure security. But the former Facebook executive pointed out that this huge brick wall may take ten years to build.

Like many others, Chamath Palihapitiya believes that Bitcoin is a binary investment, that is, its value is "either 0 or can reach millions", so in his view, today's price fluctuations of thousands of dollars In the context of a longer-term, macro development, it is actually nothing.

If the price of a single bitcoin exceeds 1 million USD, then in this case, Chamath Palihapitiya believes that bitcoin will be used as the basis for the "quasi-gold" standard. On this basis, Bitcoin will become a "hard money" (hard money), which is not held by any central bank, but by "everyone"-and with the global economy because of the new crown virus The epidemic is declining, and the possibility of this situation spreading in the real world has increased.

Chamath Palihapitiya concluded:

"If the probability of bitcoin's value before was 1%, then now the probability is about 5% or 10%. And it is very likely that by 2030, we still can't find a way out of the economic dilemma. The only way to inflate is to create some form of gold standard system, but relying on the government and the central bank is almost impossible to do this, because they can never reach a consensus on which unified financial instrument to use, and they can never exchange rate Reach a consensus. In this case, we need a bottom-up solution where people can decide to use Bitcoin themselves. "

Bitcoin market situation

At the time of writing, according to Coinmarketcap data, the bitcoin price has risen to $ 7,346.77, a 24-hour increase of 0.82%, and the market value is about $ 134.531 billion.

In fact, since the "Black Thursday" market crash on March 12, Bitcoin has begun to recover and has maintained its upward trend since April. At present, it has successfully made up for the losses caused by the March plunge. Although Bitcoin will attract some sellers after breaking through the $ 7,000 resistance level, at least in the short term, it seems unlikely to fall below the $ 6,000 support level.

As Chamath Palihapitiya said earlier, the huge brick wall may take ten years to build, and Bitcoin will continue to develop during this time, although Bitcoin is still lagging behind gold. However, it is foreseeable that some (or even greater) share will be taken from the gold market in the future. In the end, we will see that Bitcoin is equal to / greater than the market value of gold. At this time, the trend of Bitcoin can more accurately reflect the entire market.

More importantly, it is still about a month before the next halving of Bitcoin block rewards. In order to minimize inflation, Bitcoin's supply has been halved every four years and has been written in the original code. After the last block reward halving, the bitcoin price reached a historical high of nearly $ 20,000 at the end of 2017, so many bitcoin investors in Xi'an Azi are waiting for the halving in May, and look forward to this event Will stimulate prices to rise again, usher in a new wave of bull market.

However, there are some people in the market who are not very optimistic about Bitcoin, such as:

1. Tesla CEO Elon Musk recently shared some views. He believes that encryption technology may replace cash, but not database. Elon Musk stated that he is neither a proponent of Bitcoin and blockchain technology nor a critic;

2. Although the founder of Bridgewater Hedge Fund Ray Dalio (Ray Dalio) recognized that the Fed ’s additional US dollar stimulus to the economy will bring negative effects, he believes that for those seeking safe haven, gold will be a better choice .

So, do n’t envy the US government ’s cash distribution to residents, because the happiness brought about by this approach is very short-lived, and the accompanying inflation and depreciation of the US dollar will make people rush to the giant wall. The cryptocurrency community understands this, and they know the real purpose of “printing money” by American politicians — so they chose to withdraw from this crazy currency system.

Original source: