It May By Crypto Heresy, But Bitcoin Is Not Going Up. What Most Investors In Crypto Are Missing
Let’s be clear. Bitcoin just broke $10,000 for the first time in more than two months.
Bitcoin is currently trading around $11,500, it’s highest level since August, 2019. I’m happy. My twitter feed is filled with people cheering!
While people are cheering that Bitcoin is moving higher, over 30% of Bitcoin’s rise since May 15th was due to the falling dollar. In fact the dollar had it’s worst month in July since 2010:
The dollar was down more than 7% since May 15th. In that same time, Bitcoin is up 21%, in dollar terms. Why is the dollar going down?
The dollar is going down, because the Federal reserve is printing dollars at historical levels. And they’ve just begun. Deutsche Bank recently came out with a research report that projected the Fed will need to print another $14T in the coming years “if they choose the balance sheet route alone”.
That’s why gold is up, in dollar terms, over 11% since May 15th. The NASDAQ is up 19% since May 15th.
The dollar decline is even calling in to question it’s position as the dominant reserve currency. Last week Goldman Sachs research noted that “Combined with a record level of debt accumulation by the U.S. government, real concerns around the longevity of the U.S. dollar as a reserve currency have started to emerge.”
Another factor that could further pressure the dollar is the emergence of decentralized stablecoins like DAI, which are adding to the massive supply of dollars coming to market.
I’m a massive Bitcoin bull. But I’m also a dollar bear (like most of crypto). And when the markets are moving, it’s important to understand the drivers. And the main driver at the moment, is the falling dollar. And my guess is… we ain’t seen nothing yet.