Regulatory clarity is still a long way to go for the crypto market. Different countries still have a different take on cryptos. However, it seems that the US Securities and Exchange Commission is serious in making the necessary positive changes for the market. It has considered Bitcoin and Ethereum as commodities while it is looking closely at the possibility of a Bitcoin ETF.
However, despite the regulatory changes, the problem that the market currently has is the fact that cryptos lost a significant value in the last months. But if you are going to look at the prediction of different experts in the industry, there are those who think that it is only a matter of time before the next bull run. You have Mike Novogratz who believe that institutional investors will trigger the next bull run.
However, there are those who believe that the fast-growing US debt is another reason for people to bank on their cryptos. JP Morgan predicts that there is a chance of another economic crisis by 2020. For ShapeShift CEO Erik Voorhees, Bitcoin and other cryptocurrencies are going to boost their price once the next global crisis comes around. He said in a tweet that “When the next global financial crisis occurs, and the world realizes organizations with $20 trillion in debt can’t possibly ever pay it back, and thus must print it instead, and thus fiat is doomed…Watch what happens to crypto”.
An Alternative to Fiat
Bitcoin has been invented as an answer to the economic crisis. It was made ten years ago as a response to the 2008 financial crisis. The goal is to have a currency that is beyond the control of central banks. But things are quite different for Bitcoin compared to ten years ago. Regulators are starting to notice the crypto market. It has been noticed as a threat and for its use in illegal activities.
Now, there are those institutional investors that are taking notice. The question remains if it is going to be used especially when another financial crisis is already happening. And also, will it be adopted considering the volatility of cryptocurrencies. The good news though is that Bitcoin has become less volatile than other tech-related stocks such as Amazon and Netflix.
Impossible to Repay $20 Trillion
According to Voorhees, once the US debt hits $20 trillion, it becomes impossible to repay it. This means that there will be more fiat money that will have to be printed which means that it is going to diminish its worth and therefore push towards inflation.
In different parts of the world, cryptocurrencies have become popular in places that deal with inflation and economic problems. If you will take a closer look at Venezuela which is suffering from hyperinflation, Dash has become popular. Dash in Venezuela has been accepted by businesses. And also, Bitcoin mining has been used by citizens in order to exchange Bitcoin for US dollars.
Could this be the case if we experience another economic crisis similar to the 2008 financial crisis? Is it a good idea to turn to cryptocurrencies than gold in that scenario?