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Will Bitcoin Protect Investors In An Age Of Hyperinflation?
Unlike what the FED and politicians would have you believe, hyperinflation is most definitely not transitory. We have entered an age of hyperinflation, an age that has only just begun. Do you remember how shocked everyone was when inflation was reported to be above 3% some time back? Well, it recently almost reached 9%, which is a far cry from 3%! The damage has been done and it has set the global economy on a path of no return. Investors and business owners such as Michael Saylor and Paul Tudor Jones began hunting as far back as 2020 for a “place of shelter”. Those actions were initiated based on forecasts that have since been exceeded, a sure indicator that things are a lot worse than expected. We are living in challenging times and my guess is that the challenges will just keep coming.
The Death Of The Four Year Cycle
This is a narrative or viewpoint that has been suggested by many well-known Bitcoiners and analysts including on-chain guru Willy Woo. Personally, I believe that the effect will continue to decrease over time and will become less noticeable. However, to insist that it will no longer be evident is actually counterintuitive to the basic monetary policies of Bitcoin. It is the halving that triggers price appreciation. As most are aware, this takes place approximately every four years. This is the main selling point of Bitcoin as a hedge against inflation. A simple question? If you no longer believe that the halving will affect the price, are you aware of what you are indirectly suggesting? In essence, what is being suggested is that the mathematical structure of Bitcoin is no longer relevant in terms of directing price. If that is true, then your case for Bitcoin as “sound money” has been destroyed because the mathematical structure no longer drives the price. It is this very structure that is used as the case for defining Bitcoin and showing that it is superior to fiat. In what world do you destroy your own case?
Those who endorse this viewpoint are in essence suggesting that something else now drives the price. After all four-year cycles are irrelevant, is that not what has been suggested? This simultaneously makes the halving irrelevant, along with a monetary policy that is largely dominated by the halving. What then is driving the price? In a situation like this, the value is being decided upon by the exact same principles that decide the value of fiat. The halving will always influence the price! As I suggested, I believe it will weaken but it can never be removed. Until the day that there are no longer any halvings it will continue to influence the price. The day that the monetary construct of Bitcoin ceases to undergird the price is the day that it becomes what Warren Buffet believes it already is, speculative hype. Instead of believing everything you hear in regards to Bitcoin rather aim to hold fast to the sound money principles that make it unique and superior to any other form of money.
Investors have looked to Bitcoin not because the price has risen over time but because of its monetary policy. Investors like Anthony Saramucci will confirm that he and many others knowingly missed out on the earlier gains but as investors of their stature, they required more than price appreciation. When custody became more secure and the monetary policy of Bitcoin was clearly seen as a hedge against the current economic environment these investors made their move. The entire monetary policy of Bitcoin gravitates and evolves around the halving. If Bitcoin continues to behave as expected then yes I believe it will hedge investors but definitely not over the short term. I saw someone mention the other day that hodling Bitcoin since the commencement of the year was not a good strategy. That is unfortunately not hodling, that’s a trade. A four-month hold is a trade. Hodling is a term associated with years, not months. Some would even argue it is not even relative to time as a true hodler would not sell but simply earn via his holdings.
If you believe that the halving is no longer relevant then you should not invest in Bitcoin as a hedge against the current economic environment in my opinion. It’s actually that simple. Bitcoin is nothing without its monetary issuance policy and proof of work. Why do you think the WEF has addressed a shift to proof of stake? It’s a smart move if you understand a few key elements of strategic “action”.
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