Disclaimer – I am not a financial advisor, and nothing in this article should be interpreted as financial advice; it is for educational purposes only.
Currently down over 40% from its recent high, Bitcoin could be pulled down further by The Federal Reserve (The Fed) raising interest rates and offloading its balance sheet. On the other hand, recent good news renews optimism for the possibility of an upcoming Spot ETF approval. “Teucrium filed its successful application under the “33 Act” (or the Securities Act of 1933) and the “34 Act” (or the Securities Exchange Act of 1934), rather than the “40 Act” (the Investment Company Act of 1940) that the SEC approved all previous bitcoin futures ETFs under” (Michael Bellusci, CoinDesk). The distinction makes it more likely that a Spot ETF from this company will be allowed since the SEC is officially recognizing Teucrium’s crypto-based product as a security. Thus far, institutional investors haven’t been able to invest directly in bitcoin as laws prevent them from buying individual commodities, but Exchange-Traded Funds (aka ETFs) allow them to gain exposure to that commodity without directly owning the underlying asset.
Even if a tiny percentage of institutional investors’ portfolios goes into bitcoin, that will result in a massive spike in its price. Were that to happen, it’s also possible mass adoption could speed up as the upward price action brings more and more attention to the finite asset free of centralized control. Recently, the bitcoin conference in Miami highlighted that an entire country (El Salvador) and several economic zones (Portugal and Honduras) worldwide already accept bitcoin as legal tender. This kind of price action could result in other small, dynamic countries joining the bandwagon. Though it will probably take longer for America, several leading and influential Republican US Senators (like Ted Cruz) have already expressed support for bitcoin while floating laws banning The Federal Reserve from issuing a Central Bank Digital Currency (CBDC). Additionally, pro-cryptocurrency Political Action Committees, also known as PACs, are currently being formed to begin lobbying politicians. Soon, wealthy crypto entrepreneurs will be uniting by pitching in to speak to politicians using their pocketbooks.
CashApp, one of the most popular money transfer apps globally, recently announced its plans to allow customers to purchase bitcoin directly, meaning bitcoin will soon be far more accessible and convenient. People are losing faith in existing institutions, and The Federal Reserve is a privately-owned bank that many would argue has caused the devaluation of the US dollar through the constant printing of money and devaluing it. On the contrary, its direct competitor, bitcoin, is finite, decentralized money that a single entity cannot control or devalue. However, The Federal Reserve still has a significant influence over the market as bitcoin is still being treated as a speculative, risk-on investment rather than an inflation hedge. If it’s still being considered speculative, people generally pull their money out of those investments during times of hardship, as speculative investments are the first to go.
Recent comments indicate The Fed’s plan to slow the dollar’s inflation is to raise its interest rates and offload its balance sheet more quickly than previously expected, which could cause added severe short-term pain for risky assets. But again, the conundrum is that the driving factor of that decision, USD inflation, creates the most long-term demand for bitcoin as a decentralized alternative functioning as an inflation hedge savings account. These competing factors make predicting short-term bitcoin market fluctuations exceedingly tricky. Still, in my opinion, all long-term signs point to a bright future for the emerging asset and depending on how the market and masses react to the upcoming economic turmoil, the long term might not be that far away.
Click below to watch my interview with Josh Guest of the HiFi Report, where we discuss the factors of why bitcoin makes the perfect long-term savings vehicle.
https://rumble.com/v11weyo-jsa-josh-guest-on-why-bitcoin-is-the-perfect-money.html
