This Is The Perfect Environment For Cryptocurrencies To Continue To Thrive

in cryptocurrency •  5 months ago

Seemingly every week, we hear about Bitcoin or any number of the Altcoins making a new all time high. 

A trend that I don't see changing any time soon. 

You can't flip on a TV Finance channel without someone commenting on how high Bitcoin is and how it is likely to crash back down to earth shortly, leaving a trail of heartache in it's path. 

However, when looking at the current environment I think they could be very wrong, dead wrong in fact. 

Bitcoin has made many millionaires over the past few years and many more just in the last couple of months. 

Even our beloved Steem has made a couple of millionaires as of late. 

A recent post by one can be seen here:

https://steemit.com/steemit/@trafalgar/3-months-1000-followers-and-usd1-million-later

Taking all that into consideration, why would I think that this rally in the virtual currency space isn't going to be stopping any time soon?

For many reasons actually, but for this post I want to focus on the current economic and political environments as major reasons. 

In many ways, this is really the perfect environment for virtual currencies to dominate!

Low Interest Rate Environment

Right now we are in an extremely low interest rate environment. An environment that could remain for quite some time. 

Traditionally in low interest rate environments, risky assets tend to trade at a premium.

We see that all the time in the kinds of stocks that get bid up in low interest rate environments vs. the kinds of stocks that tend to catch bids in a higher interest environment. 

Growth stocks trade at inflated multiples during low interest rate environments while the blue chip dividend payers often trade at slightly depressed multiples. That completely flips when interest rates are high. 

Bitcoin is the ultimate speculative asset currently and in this environment there are those out there willing to take on Bitcoin as a carry trade.

If you are not familiar, a carry trade can be defined as:

"A strategy in which an investor borrows money at a low interest rate in order to invest in an asset that is likely to provide a higher return. This strategy is very common in the foreign exchange market."

As money struggles to earn much of a return in this kind of environment it will easily flow into things that are more speculative in nature. 

Government Mistrust Around The Globe

People haven't trusted their governments for decades, but we might be at an all time high regarding mistrust currently. I am not even talking about just what is going on Washington, take a look overseas.

Japan has been pouring new debt onto old debt by issuing bonds at record low interest rates. The treasuries yield next to nothing even though it's current debt load is close to 250% of GDP. Something about that doesn't sound quite right. 

Investors overseas are deciding that instead of holding these non yielding (or basically non yielding) bonds, they would rather try their hand at owning some Bitcoins. 

Take a look at the governments in India and Venezuela who just went in and got rid of old currency notes a couple months back. Nothing breads mistrust like a government telling it's people the currency you are holding is soon going to be worthless so you better exchange it now. 

Ironically, the moves by the governments in these countries happened right about the same time that the cryptocurrency space started to take off, coincidence?

Millennials Love It

In general the millennials understand Bitcoin. They understand digital money. It's what they have grown up with and to them it makes sense. 

It makes more sense than investing in something like a piece of gold for practical reasons as well as plain old investment reasons. 

For one, gold's supply is ever increasing. As the price goes up, more supply comes onto the market as there is more of an incentive for miners to go get it out of the ground. 

Bitcoin on the other hand has a limited and known supply. There is no government intervention that can suddenly change that supply. The supply is what it is and it is known in advance. 

Also, how much easier is it to make a transaction in something using a digital currency like Bitcoin as opposed to carrying around some gold in your pocket?

Infinitely easier!

And you know the millennials, we are all about easy! ;)

Conclusions:

For the reasons stated above I don't see the current price trends in the virtual currency markets to be ending any time soon. No matter how elevated the prices have been in the short term.

There are simply too many tailwinds at their back. Until the environment changes significantly, and many of these tailwinds go away, my price prediction for the cryptocurrency space is and continues to be...

Higher!

Stay informed my friends!

Sources:

https://www.forbes.com/sites/panosmourdoukoutas/2017/06/09/bitcoin-will-make-many-more-millionaires-before-diving/#6d5ad1a51083

Image Sources:

https://null-byte.wonderhowto.com/how-to/cryptocurrency-for-hacker-part-2-currency-for-hackers-0166451/

https://financialengines.com/education-center/saving-and-investing-in-a-low-interest-rate-environment/

https://veewords.wordpress.com/2013/04/09/the-movie-that-started-it-all-v-for-vendetta/

http://blog.capital.org/tag/millennials/

Follow me: @jrcornel

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Excellent article, very well written. Thanks for sharing! Yes, the society we are on today created a perfect environment for crytocurrency to grow. Technology and internet are the two main reasons in my opinion. However, it is important for people to also earn money in a safer and traditional way, so we don't lose everything when something bad happens to crytocurrency

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a good point. i prefer precious metals as a hedge to cryptos and legacy fiats. i don't feel the debt based system of stocks and loans is a reliable container anymore. we are witnessing both people on the street and those in the finance industry flee their wealth into cryptos.

the reasons for this have become numerous, it's not simply a matter of technology anymore. important countries like China, Russia and others have been totally fed up with the petro-dollar system. future technology (Tesla among others) is imminent that will obsolete oil rather quickly and change our lives in so many ways. the fracturing of the EU, the political/media insanity of the US, the fact that the existing system is propped up by nothing but debt, new leaks every month shaking the foundations of trust in our governments.

crypto has been ready for something like this all along. it's a great time to be alive and involved!

Steem's time has yet to come. Zappl launching soon. And many other open-source based on Steem launching too. I'm thrilled to be a part of this crypto endevour and will be inviting people to join. At least those who don't consider every online money creating opportunities - a scam. The most important part is that on Steemit I have a feel like I'm part of one giant family where we care about eachother in many ways. That's why Steemit is so much more entertaining and beautiful than simple crypto exchanging. We all give contributions to this project, no matter how small or big they are, they still help Steemit growth, wellbeing and development. Thanks for a nice reminder of crypto status and your opinion @jrcornel

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Zappl looks promising!

More and more people are coming in to cryptos so to me it's going higher too.

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I agree with that. The cryptoverse will "inflate"!

This is so good to read, so encouraging for many on here and can only agree with you: the political and social-economical atmosphere is ripe for crypto-currencies and we all get the rewards, especially if we are into the most powerful platforms, as well as the King of Popularity, Bitcoin.

Thanks for another excellent piece, excellent information and positivity. Namaste :)

Bitcoin was created in reaction to the 2008 financial crisis and I think it has a bright future because the issues that caused the crisis have not been fully solved. Many people now realize that 'money' supply and interest rates can and will be manipulated by the government as needed and that the only real value is in assets, be it shares, gold or real estate. Those assets however are difficult to use as currency, so there is a need for a liquid store of value that is shielded from government interference but easy to use and move around. Cryptocurrencies will fill that role.

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I agree. Great comment by the way!

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fingers crossed to "higher!"

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I agree, as well! Good post.

Agree!, seems like prices are going to continue to rise for the moment... I think we are in a time where paradigms are shifting...

Government mistrust has a lot to do with what's fueling this. I talked to a friend from college and he said: "All cryptocurrencies are are blips on a computer." I asked him- what do you think money is? Who do you trust, the government or people? I'll take people... the govt has a track record (and we know what that is!)

Don't get me wrong, i'm not disagreeing, but there is something that worries me, and that is the muted reactions of the banksters. Bitcoin and the technology behind it are their biggest threat. They stand to loose their control and it seems they are doing nothing about it. Given the power they have, they could easily shutdown exchanges and make bitcoin value plummet. The fact that they are going along with it, seems weird to me and it raises a red flag. What's your thought on this?

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If peer-2-peer is stoppable, wouldn't the music industry have stopped it already?

Of course, exhanges could be attacked but based on what reasons? It would lead to lots of debate. And what is gained if cryptocurrency is pushed underground so that visibility is completely obscured?

I think the first genuine pushback will come if too many ICO's lead to too many scams. But regulating the Internet is difficult.

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Reasons for shutting down bitcoin exchanges? How about saying that bitcoin is used for sponsoring terrorism? They can come up with an investigation after a major terror attack and say that it was funded with bitcoin and make it illegal. In the aftermath of a tragic event, people who are so easily manipulated, could see bitcoin as a bad thing.

Crypto will be the new normal and it will happen because our governments have failed us completely. They continue to erode our buying power and ask more in taxes. The younger crowd will rebel but not in formal war but currency war. They will remove themselves from the matrix and produce this decentralized ecosystem and embrace it. It will be a hard fight to keep the crypto's but we will win and make life here on earth so much better.

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So long as we dont get overran by the religion of peace, I agree. lol

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we are getting into another crisis and at least for now they're really feeling it in Europe.... You should see how european banks are stock piling bitcoin as for the younger generation they're really thriving in the japanese btc market. We are soon to follow here in the states as you can see on google trends how the keyterm bitcoin has become a popular search term

People need to be able to define two words, CURRENCY and MONEY.
They then need to be able to realize the difference, and how it effects them.

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The technology is solid and has the potential to change the way we do MANY things... and then there's the fact that we're still on the bleeding edge of any kind of mass adoption, so there's a LOT of money that could potentially flow into the market.

Now, it BTC always going to stay the "big dog?" Probably not. For all I know, 20 years from now we'll be looking at a set of alt coins that don't even exist today.

The days of meaningful interest returns on savings accounts appear to be long gone, you have to invest in something or your cash gets eaten away by inflation. At 5% interest many did not wish to speculate but now have little choice, the money has to go somewhere.

Crypto currencies are the future for sure but I think that so many Shart Coins will hit the market at an increasing rate and people will be burned by those which will vaporize a lot of investment. When some of the promise falls short and people don't make a bunch of money there will be a pull back. But who knows how strong the legs will be on this surge. I have already been blown away. Feels like 2013 for sure. We waited a long time and a lot of us couldn't take the pain. I'm actually more looking to position myself for the next surge which might be years down the road.

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Waves of boom and bust are needed to ptopel this 'industry' forward. That's not different from other new industries. In the end, only the strong (and useful) blockchain applications will survive.

Governments must be sitting there trying to figure out what they can do to get a slice of the pie from the everyday citizens...

Good article. But what worries me is that governments, even though they move slow, are on the prowl of digital currencies. I can image the U.S. government will create their own cyrpto to get the American people to go cashless. They will still be in control of the money but can say, hey it's digital you're safe. And that scares me!

interesting and very informative post, thank you for letting us know :)

News for bitcoin every day we hear it, i always check the results for bitcoin.
For a while the result is still very good. This is also interesting news from you @jrcornel and this is very beneficial for all steemit community.
Thank you for sharing !!!
Upvote & Resteem

thanks for sharing and there is much more concern with the market and trends that favor cryptos as people are now seeing the 'selected companies" always pumped in the market to keep it up. Earnings no longer correlate with stock price. Insiders have been selling by a much larger % than buyers. They know it's time...and the combination of the consumer out money...housing at a peak or becoming unaffordable is a bad mix. You see chain store closing annoucements each week. Something is coming...the banks are on "borrowed time' another indicator for the rise in crypto's.

millennials understand Bitcoin

yeah. you got some millennials here ;} with banks charging 15 bucks a month for storage. kind makes sense to make your money to start doing a workout for you. and kind dangerous to be carrying gold around. we want digital payments.

It wasn't a coincidence about cryptocurrency going up during those troubling times in those counties where gov making people savings worthless. They got back on the feet and decided we need to know how to work around this.

Great post! It's an excellent example that the fiat empire is coming to an end as people lose faith and put their money into cryptocurrency. Great road ahead! ;)

I still get confused looks when I mention bitcoin. It's far from mainstream yet.

Excellent perspective @jrcornel. I enjoy reading these, well planned & thought out. Higher indeed!

Japan has been pouring new debt onto old debt by issuing bonds at record low interest rates. The treasuries yield next to nothing even though it's current debt load is close to 250% of GDP. Something about that doesn't sound quite right.

Although Japan is one of the first to legalize Bitcoin.
https://www.cryptocoinsnews.com/japan-accepts-bitcoin-as-legal-payment-method-whats-next/

Singapore as a bolder move has started tokenizing their currency.
https://steemit.com/sirwinchester/@sirwinchester/singapore-to-launch-national-token-on-ethereum-blockchain

My Country the Philippines has not yet legalized it. The closest thing legislature did was to recognize it as 'property'.. (looking up source...). It's good that we have coins.ph as exchange platform allowing more Filipinos to get into Bitcoin.

Thanks, that's a nice article. I think all you've written is true. The end, the HIGHER, too :)

Thank you for your information

Thanks for sharing!

Love this post!
I do believe millennials will have a huge influence.
Let us hope change is coming and that the next age will value fairness in all respects.

Congratulations @jrcornel!
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For one, gold's supply is ever increasing. As the price goes up, more supply comes onto the market as there is more of an incentive for miners to go get it out of the ground.

Gold mine production has actually been declining for the last few years.

You are right about that this is the right time for the crypto to grow.
As for your comment on currency ban in India, it was not that bad, as it may have looked from outside. It was something which was necessary to limit the black money. Most people did not lose any money and were given new notes in exchange of old notes. Only people with unaccounted money lost a part of their black money. If you earn good, you gotta pay tax, as simple as that. Nothing wrong in that. You can read more about the 2 sides of coin here: https://steemit.com/economy/@siddartha/everything-you-needed-to-know-about-the-currency-ban-in-india

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Love it @jrcornel

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I wish to thank you personally for voting for me this past year. Steem has been fun from the beginning, when most people recognized each other. Now it is a little easier to get followers and votes, but I still thank you for contributing to my success. I'd love to up-vote you, but you have nothing recent.

Perfect my friend @jrcornel

Thank you @jrcornel ! Have a great time.

Positive and informative article. Upvote and follow. The world is changing ever so fast. Its a pendulum you cant stop. People sick of the lies and centralization and thé old regime. Our thoughts and ideas are spreading exponentially. Nothing can hold it back.

The next step is hyperinflation than the abolishment of conventional fiat monies. I cant wait.

I have a friend that started buying bitcoin back in 2014 as a carry trade. He is on of the most knowledgeable people I know on bitcoin. He has read over 100 white papers and holds only a handful of coins.

I on the other hand have mostly low priced but big marketcap Alt. But I'm going start loading up on Eth, LTE and Bitcoin. I think there will be a lot of millionares made with Cryptos, over the next few years. Even the dogshit coins will probably be in the 2-3 range from being less tan .01 -to .05 now.

I also think we might see a Stock Market Crash and money from there flow into cryptos.

From what I have seen lately most new cryptos are not really sold a a currency like Bitcoin or Eth but more like if you believe in our project them support it by buying into our ICO. So it's a new market now.

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...and what coins would be in the "handful" that your friend is holding now?

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Bitcoin, ETH, LTC, Monero, Maidsafe

Agreed. The current economic structure was not originally designed for billions of people or fairness for that mater. I predict cryptocurrencies will hail the start of a new era for mankind. I just hope it does so without some sore loser decided to bomb the place up!

Thank you for the post, but you make some generalisations & I'm not sure there's the evidence to back it up.

  1. Is there evidence that people are borrowing Yen to buy BTC? There's certainly talk of institutional investors borrowing Yen to invest in other assets like European or US bonds that pay more (even if it's still a very low %) , but BTC?

  2. 'Millennials love BTC'? I'd say a small % of millennials have BTC wallets, that's all. If you live in San Fran, or NY or certain areas of London or other European cities then BTC is much more common, but I'd say it's still 'fringe' for the majority of this demographic. I could be wrong of course! :)

I can't but to agree with you. It all up up

Great read, very encouraging.
I think this chart says it all:
http://coinmarketcap.com/charts/
We're at a 105,000,000,000 market cap for all cryptos, the highest it's ever been.

Thank you for this excellent article. I believe the the value of Steem will continue to go up and up.

great article, crytocurrency has come like a messiah in time to save the people, the government has failed and we can't trust them anymore.

Beautiful post friend, I really feel blessed to be involved at the early stage of altcoins even though.... I was still quite late to the party...But still better late than never :)

Great post, like the insight, and agree with you

Great article! You are 100% correct about bitcoin and millennials. Every person I talk to about cryptocurrency the only people who are interested about it are millennials. Old school people are having a hard time grasping this new technology. They say things like it won't last or if the central banks collapse people will be in chaos and no one will be using cryptos. But I truly believe this is the way of the future to get rid of fiat currency and central banks control.

great post ! thanks for your infos!

I cant wait to see more coins base on the steemit model. I think if we can one that is related to specfic to a product or service, there will be less worthless info being populated on here.

I'm curious as to what the overall percentage of the population is that's aware of Bitcoin and other cryptocurrencies...

When I ask people if they've ever heard of Bitcoin, I'd say 10-20% say yes, but when I ask them what it is, I have yet to have someone explain what it is, let alone how to acquire it!

This whole concept has some long legs to run on in my opinion!

Just got into cryptocurrencies this month for more or less all the reasons you mentioned. Lets see how far we can go!

Millennials love it! EXACTLY. I sometimes forget about this demo, and I shouldn't. Trendsetting the future. You can't fit dollar bills inside a cell phone...Bitcoin wins just cuz of that fact alone I think!
Good read.

Let's print our money Ctrl + P