Just a little over months ago, on May 12, 2020, Bitcoin had its miner’s reward slashed by 50% in what is termed and celebrated as the “bitcoin-halving,” thereby reducing the amount of the coin being released into the market by half from 12.5 per block to 6.125 per block.
This event also reduced the BTC annual inflation rate to just 1.8%, far below the global average inflation rate for fiat and gold.
The question everyone seems to be asking right now is – what lies ahead for the number of cryptocurrencies after the halving?
Is bitcoin a hedge against the impending economic recession caused by central banks’ and governments’ reckless monetary policies worldwide?
In this article, we want to believe just that for good reasons.
Here are 3 Reasons Why Bitcoin is Your Best Bet against the Recession.
1. Bitcoin is a More Resilient Asset
In what is described as the “black Thursday” within the cryptocurrency community, the price of Bitcoin tanked by more than 40% along with the stock market as the novel Coronavirus took its toll on the economy, hearts, and minds of the people.
To contain the spread of the virus, governments worldwide responded by implementing total lockdowns. Fear and panic took overall markets and sent prices falling by margins never seen for years, crippling all significant economic activities worldwide.
To revive the dying economies, governments and central banks started an endless printing of money to support the people and businesses in what they call “quantitative easing” programs.
Without any form of government support whatsoever, the price of Bitcoin has risen by more than 150% to over $9,000 from the $3,600 low on March 12, 2020, while the stock market, even with the trillions of dollars support, cannot boast of similar recovery success.
It is proving beyond all reasonable doubt that Bitcoin is more resilient in a financial crisis than the traditional monetary system controlled by central banks –thanks to its “quantitative hardening” mechanism against central banks’ quantitative easing programs.
2. Bitcoin Protects You against Inflation
With the endless money printing of governments and central banks worldwide, one doesn’t need to be a professor of economics to know that this will only fuel (hyper) inflation in the medium to long term.
The maximum supply of Bitcoin is fixed at 21 million, nothing more and nothing less.
And just like gold, which is similarly scarce though it doesn’t have any known, fixed maximum supply, bitcoin protects its investors against inflationary pressures caused by the reckless monetary policies of central banks.
3. Bitcoin Fundamentals Keeps Getting Stronger
There’s an increase in the number of people learning about and investing in Bitcoin.
The network mining hash rate has been consistently rising despite the miners’ reward reduction (halving) on May 12, 2020, which many believe will lead to “miners’ capitulation.”
The more hashing (computing) power in the network, the greater its security and overall resistance to attack.
The Bitcoin fundamentals are getting stronger by the day.
- As political and economic uncertainties rock the world and people look for safe-haven investment vehicles to protect and preserve their wealth, Bitcoin is a significant consideration.
- Institutional investors and governments continue increasing their investments in blockchain and cryptocurrency technologies.
- The demand for bitcoin is constantly rising, even in the face of dwindling supply.
- Bitcoin has a limited and fixed maximum output.
Thus, one can safely conclude that the price of bitcoin will continue to rise over time.
Despite the regular fluctuations in the price of bitcoin – which the media and critics will be quick to point out – bitcoin has remained the best-performing asset in the last decade.
Haven has appreciated by more than 9,000,000% since 2009, when it was launched.
No other asset has performed this massively in the history of humanity.
Though it would be irrational to expect similar price appreciation in the next decade of Bitcoin’s existence, it is a safer bet to invest and keep a reasonable amount of your wealth in Bitcoin in the face of the impending global recession and inflation caused by governments and central banks endless money printing.
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