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Rampant Inflation Is on the Way and Here’s What it Means for Bitcoin

Posted 4/2/20 by Yan Pritzker

We currently have govern­ments and central banks all over the world stepping up to try to save their economies from imploding. But as we know, the reason they are imploding is because every­body’s on lockdown and produc­tivity is grinding to a halt. There’s going to be a lot less stuff produced. There’s also going to be a lot less demand for that stuff as people are locked in their homes and unable to go to restau­rants, bars, stores, museums, or anywhere else.

The govern­ment is trying to solve this with money. They’ll be printing lots and lots of money. They’re going to make it easy for people to take out loans. Mortgage rates will go down. Small business loan rates will go down. There will be tax breaks. We’re going to see helicopter money (i.e. people getting money directly from the govern­ment).

What does this mean for money?

So the question you have to ask yourself is: What does this all mean for money? As they produce more of it, each individual unit of money loses value (i.e. infla­tion). Usually, we have a little bit of infla­tion every year. The govern­ment will tell you that the infla­tion rate is about 2%, but that doesn’t really match reality. Just look at things like educa­tion, housing, the stock market, etc.; the price of those things is clearly increasing at a rate higher than 2% in recent years.

We had maybe a trillion dollars worth of base money going into the finan­cial crisis of 2008, and came out of that crisis with about 4 trillion. We’re going to see much bigger prints this time. The Fed’s balance sheet is already at $4.6T and growing as it continues to buy more and more assets to rescue the market.

There’s only one asset on this planet that is infla­tion proof, and that is Bitcoin. The supply of Bitcoin cannot be inflated. Even the supply of gold can be increased if it becomes profitable to do so. With Bitcoin, that’s just not possible.

There’s only one asset on this planet that is infla­tion proof, and that is Bitcoin.

Yan Pritzker

The impact on Bitcoin

What does this all mean for Bitcoin? Well, in the long run, it means that once people realize what’s happening to their money, they’re going to start buying Bitcoin, since it’s the only thing that’s not going to be subject to monetary policy manip­u­la­tion. Unfor­tu­nately, Bitcoin, like every­thing else took a drop recently. This was to be expected since there was a mass panic sell-off of all assets, and was forecast by many in the space.

Bitcoin isn’t quite where it needs to be in terms of market cap and penetra­tion in order to survive events like this unscathed. We only have $150 billion worth of Bitcoin, so of course it’s going to suffer during an event like the coron­avirus. But it’s impor­tant to under­stand that Bitcoin’s design is to be infla­tion proof, seizure proof, and censor­ship-resis­tant. Those charac­ter­is­tics are unchange­able, whether there’s a crisis or not. As more people wise up to this, we’re going to see more and more demand for Bitcoin. And you know what that means for Bitcoin’s price.

Bitcoin’s design is to be infla­tion proof, seizure proof, and censor­ship resis­tant. Those charac­ter­is­tics are unchange­able, whether there’s a crisis or not. And as more people wise up to this, we’re going to see more and more demand for Bitcoin.

Yan Pritzker

The halving is coming too

It’s impor­tant to remember is that we are entering into the halving in May where the amount of new Bitcoin being produced is going to be cut in half. It’s quite a striking coinci­dence that this will happen at a time where the amount of every other money being produced in the world is going to go up tremen­dously.

Google Trends for “Bitcoin halving” (captured on March 27, 2020).

While every other market in the world is dropping, Google Trends for “Bitcoin halving” are at an all-time high. People are wising up to this.

The question is: Do you want to be the first to know that, under­stand it, and act on it? Or do you want to be the last?

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What to expect while on lockdown

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Related: Coron­avirus, Finan­cial Crisis, and the Epic Bitcoin Crash of March 2020 [Swan Signal]

This blog offers thoughts and opinions on Bitcoin from the Swan Bitcoin team and friends. Swan Bitcoin is the easiest way to buy Bitcoin using your bank account automatically every week or month, starting with as little as $10. Sign up or learn more here.

Yan Pritzker

Yan Pritzker is the co-founder and CTO of Swan Bitcoin, the best place to buy Bitcoin with easy recurring purchases straight from your bank account. Yan is also the author of Inventing Bitcoin, a quick guide to why Bitcoin was invented and how it works.[

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