MarketsCan bitcoin survive this Energy Crisis? | Bitcoin Weekly Update

Can bitcoin survive this Energy Crisis? | Bitcoin Weekly Update

Can bitcoin survive this Energy Crisis? Bitcoin is now trading just below $20,000 dollars not exactly what we want to see. Bitcoin’s market cap is now about 375 billion dollars or so. Over 90% of the available supply of bitcoin has been distributed, and the inflation rate is still at 1.76%.

Can bitcoin survive this Energy Crisis? The real exchange volume has come down significantly and now less than six billion dollars are being traded in a 24-hour period. For continuing to protect the bitcoin network during that time, miners have received 18.4 million dollars in compensation. Bitcoin is now down 71% from its all-time high of 69,000 in November of last year, and GBTC is currently trading at a 32% discount.

If we compare bitcoin to gold and the s&p 500, bitcoin falls by 60% over a year, but over the course of two to ten years, bitcoin continues to outperform both. Then we can look at bitcoin’s price closing history and sitting below 20,000 means that bitcoin is traded above this position 610 days of its lifetime. This means that if you had bought and held 87% of bitcoin’s days and held it until today you would still be in profit.

Can bitcoin survive this Energy Crisis? If we go and take a look at bitcoin, gold, s&p 500, Nasdaq, and tlt you can see that the compound annual growth rate of bitcoin coming in at 113% continues to outperform these other assets, and bitcoin’s five-year sharp ratio is just below 0.8 means that if you add it to a diversified portfolio it would have an incredibly positive impact.

The energy crisis seems to be affecting Europe. Now of course this doesn’t have a direct impact on bitcoin’s price not very many people are buying oil and dropping bitcoin or vice versa buying bitcoin and dropping oil. 

What we do see is that the geopolitical chess game is underway. There are reports that are now surfacing that many countries like Germany and others are in a dire situation. We are seeing on the ground whether it’s individuals or businesses they’re reporting that their electricity bills are going parabolic, which obviously spells trouble going into the winter in Europe. Also, there are other things that seem to be happening there are reports coming out that Russia is now selling oil to China. Who then turns around and is immediately just putting up the price. They’re marking it up and then they’re selling it to those European countries this allows the European countries to claim a good virtue signal that they’re not buying Russian oil but also means that china they’re playing market maker and they’re making a damn good profit doing it.

On top of that, we’ve also seen countries like Hungary that all of a sudden stood up and said we’re not playing this game anymore. We’re gonna strike deals with the Russian energy companies because we need the energy in order to make sure our people are safe. Then just in the last 48 hours, we’ve seen Russia come out and they’ve said you know what Nordstrom won we’re gonna shut that bad boy down we’re having some technical issues. We’ll let you know when it comes back online. 

Of course, there are all sorts of complexities involved in this, but when you see energy prices exploding upwards that’s a big problem. On top of that if you wanted to actually drive GDP growth both in the united states and globally what would you do? You would have low-interest rates and you’d have real wage growth but we’re seeing the exact opposite. 

Can bitcoin survive this Energy Crisis? In the united states, interest rates are going up while we’re in a recession. On top of that, we’re also seeing real wages people are actually making less and less money in 16 of the last 18 months. They’ve made less money than they were previously. So this spells complete trouble. 

Now, why does that all matter as the global financial system gets in a more dire situation it becomes harder and harder for the federal reserve to actually raise interest rates and create tighter financial conditions? They saying that they are committed to doing that and so far they’ve held true to their work, but at some point, they’re going to have to pivot they’ll have to waive that white flag.

The big question in finance right now is will the central banks both the federal reserve and those around the world are going to capitulate before the end of 2022, or will this carry into 2023 and at some point then we’ll return to a loose monetary policy? 

Related: Which Cryptos Are At Risk? 

Between 1940 and 2021 the average debt to GDP ratio in America was sitting around 68%. Now we have nearly 140% debt to GDP. This means that the central bank cannot raise interest rates to move at some point they have to stop and we will return to that loose monetary policy.

Related: Last Weak top performing cryptos

When that happens bitcoin risk assets growth stocks and many other things that most of you have in your portfolio will likely then have a resurgence and a recovery and return back to all-time highs, but until that moment the federal reserve they are in control and so far they are continuing to punish the market in their quest to destroy consumer demand. It’s working but at some point, they’ll have to stop and that’s what I expect much better news for bitcoin and other risk assets.

RELATED ARTICLES

Most Popular

Latest Posts