📍 Austin, TX, USA. on 9th Jun 2022 at 00:00
4 mins read
Listen to this article:
The price of Bitcoin has leapt over the psychological barrier of $40,000 even though the Fed has hiked interest rates and politicians are now openly talking about World War III.
Bitcoin first broke above $40k on Wednesday, before climbing over $41k on the same day. Its unusually perky performance mirrored the stock market.
On Wednesday, US stocks closed 2.2% higher after the Fed raised interest rates - which is exactly the opposite of what is supposed to happen.
Shares jittered as Fed chair Jay Powell revealed the central bank’s plans and quickly recovered after he said the chances of a recession are “not particularly elevated”.
The performance of Bitcoin is surprising because it comes amid fears that a global conflict is about to erupt. On Wednesday, President Zelensky of Ukraine claimed World War III has already started.
Ruud Feltkamp, CEO of crypto trading bot Cryptohopper: “Although it feels like we are in a bear market, Bitcoin has been in an uptrend since January 23. If you look at the lows, you will see that it ends up a little higher. The question is whether this will continue, but I think the market looks very positive.
“In addition, tensions in the world have rarely been as significant as now. The fact that Bitcoin has mainly risen since the outbreak of the war shows that such macro events have a limited effect, and Bitcoin is once again proving itself as a safe-haven asset. If you live somewhere with high inflation, it's clear again and again that crypto is a serious alternative. And with 15% of Americans still in crypto, the amount of potential in price movement remains enormous.”
Mikkel Mørch, executive director of the investment fund ARK36, said the growth “shows Bitcoin’s relative strength”.
He added: “It is not unlikely that institutional investors have once again started contemplating Bitcoin as a safe haven, store-of-value kind of asset. Interestingly, there may be an added flavour to this narrative now.
“Investors are noting that sanctions placed on Russia - especially freezing Russia's central bank reserves - may result in the diminished status of the dollar as the global reserve currency. If we are seeing the beginnings of a new monetary world order with a weaker dollar, Bitcoin will likely be one of the long-term beneficiaries of this shift. Taking that into account, there is little wonder why banking industry insiders are predicting that BTC will be worth between $100-200K within the next few years.”
Mørch is likely to be referring to a recent prediction by Greg Beard, the former Wall Street oil and gas superstar investor that now runs a crypto mining operation in the old coal fields of Pennsylvania.
Beard, CEO of Stronghold Digital Mining, told Fortune it would soon be worth up to $200,000.
"If you're a fundamental-style investor that believes in Bitcoin as a store of value, it should be worth multiples of today's price in five years, I'd say at least five times,” he said;
Beard compared Bitcoin favourably to gold as a store of value and even for the buying and selling of goods or services. You can now buy anything from homes to magazine subscriptions with crypto. A fistful of gold might be extremely valuable, but it’s not actually all that useful as a means of payment.
Gold also has a funny habit of “showing up” when its price rises, Beard continued. Until its reserves are depleted, Planet Earth will always provide some more gold for the market.
Even when every last scrap has been mined and locked safely away in billionaires’ vaults, we’ll be able to zoom out into space and start mining asteroids. There is one golden space rock in the Solar System that is estimated to be worth more than $10 quadrillion. If this was tugged down to Earth, it would break the financial system pretty quickly and make humanity’s obsession with a shiny metal look pretty silly.
Bitcoin is perhaps the best hedge against heavenly bodies because there will only ever be a total of 21 million in existence.
Ransu Salovaara, CEO at Likvidi, a sustainable finance company, said: “When we look at the gold supply, we don’t really have any idea of what reserves are there that can be used to hold back or sell gold to the market. What we do know is that at certain gold price points some mining operations will become profitable enough to start digging again. Therein lies the big difference between bitcoin and gold. Bitcoin supply was hardcoded 10 years ago by Satoshi. I think $200,000 bitcoin price in 5 years is pretty conservative.”
However, as Bitcoin enjoys a moment in the sun there has also been a huge dip in NFT trading, prompting speculation that the bubble is about to pop.
Eliézer Ndinga, director of research at Index Token Issuer Amun, said: "The NFTs market volumes hit the lowest since last July. OpenSea alone has fallen by 70% in trading volume. Moreover, according to data aggregated by DappRadar, Ethereum recorded a 33% drop in trading volume across the entire NFT market, as well as a nearly 61% drop on Solana, a 38% decline on play-to-earn game Axie Infinity’s Ronin chain.”
But not be too alarmed. Ndinga also said the “NFT market will not stay down for long”.