Bitcoin has long been known as an extremely volatile asset, normal to see 80% declines and 1,000% inclines. As the global economy starts to fall, Bitcoin has been dethroned as the most volatile asset, with assets typically considered safe taking its place.
The Russian ruble is the first major currency to become more volatile than Bitcoin, with the Japanese yen not far behind. These currency shifts come amid a time when even the US dollar, the euro and the Great British pound have hit record volatility. Of course, this has something to do with the COVID-19 pandemic, economic shutdowns and the mass money printing methods adopted by central banks.
Regardless, major currencies are hitting 40-50 year records on several metrics from volatility to inflation and interest rate hikes. This shows no sign of stopping, despite the pandemic being over, due to the mass spending and printing used to inflate the economy over the last two years. While the world was locked down, assets were making all-time highs, only because the governments were pumping trillions into the economy.
Beyond currencies, the Dow Jones Index and many major stocks have tumbled amid the looming macroeconomic environment as well, becoming more volatile than the top cryptocurrency. These are assets held by retirement accounts and funds generally considered “safe”. These same funds have often disgraced Bitcoin as too volatile to ever be relied on.
All major US banks have estimated that US equities will return an average of 0% between now and 2030. This would be unprecedented and a major blow to the world’s largest economy. All of this gives a bit more validity to Bitcoin becoming a reserve asset for countries around the world, especially as countries recognize Swift’s centralized model may not work in their favor.
Throughout the Bitcoin world, there is a common idea that it could topple the dollar as the global reserve currency. This is often laughed at, although the world is long overdue for a change. There have been six global reserve currencies in history, all lasting between 90 and 100 years. The US dollar attained its spot in 1921 and is now in year 101 of this cycle. A new global reserve coming into power very soon would perfectly align with history.
This article was written by Patrick Hagerty on the Exploring Digital Assets on 25.10.2022 and has been published here with permission.