On September 15, 2008, Lehman Brothers, the fourth largest investment bank in the United States, announced to file for bankruptcy protection after failing to negotiate an acquisition due to investment failure, triggering a global financial tsunami. On November 1 of the same year, Satoshi Nakamoto released the Bitcoin white paper "Bitcoin White Paper: A Peer-to-Peer Electronic Cash System".
Satoshi Nakamoto left a sentence in the first block of Bitcoin:
"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"
The emergence of Bitcoin is essentially a countermeasure to the government's excessive currency issuance. As a decentralized currency system that is not controlled by a central authority, it has attracted the pursuit of many idealists and speculators. Bitcoin came into being under the background of the financial tsunami in 2008, so what kind of performance will Bitcoin have in this upcoming new round of financial tsunami?
A new round of financial tsunami is brewing
In the past few decades, a financial crisis has erupted on average every 10 years. Since the subprime mortgage crisis in 2007, 10 years have passed quietly. According to historical laws, a new round of financial tsunami may be imminent.
Presumably everyone has already felt a little bit in their own life and work. At a class reunion, a classmate of mine was engaged in car sales, and confided his difficulties, saying that the sales of the car market had almost halved in the past few years. Of course, this is just some areas and does not represent the entire economic environment. Below I will quote some mainstream views to illustrate the possibility of a new round of financial tsunami.
1. U.S. debt is inverted
The term U.S. debt inversion has frequently appeared in the media recently. Let’s talk about what is U.S. debt inversion?
When long-term bond yields are lower than short-term yields in the market, it is called "yield inversion", that is, the yield curve appears inverted. To put it simply, the yield on short-term treasury bonds is higher than that on long-term treasury bonds, and under normal circumstances, the yield on long-term treasury bonds must be higher than that on short-term treasury bonds.
An inverted Treasury yield curve is seen as one of the hallmarks of a U.S. recession. It shows that the market's long-term investment confidence has weakened, and it is not optimistic about the future. The bond market is the core of the capital market. Players are basically large institutions. This is the most sensitive fund to the market. They are not optimistic about the future, which means that the crisis is likely to come.
Rewind the history:
An inversion occurred in 1989, and the U.S. economy ushered in a depression in 1990.
In 2000, there was an inversion, and in 2001, the Internet bubble subsided at full speed.
An inversion occurred in 2006, and the subprime mortgage crisis in 2007 triggered a global financial tsunami.
In 2019 there was an inversion, in 2020. . . . . .
2. The global debt crisis
Since the financial crisis in 2008, we have ushered in the era of flooding, the U.S. stock market has ushered in a super-long bull market, and China's real estate has also broken through the sky. Those who come out to mix, always have to pay back, and the global asset price and the real economy have deviated greatly.
The International Monetary Fund warned in April that rising levels of corporate and government indebtedness, combined with a surge in riskier lending, could leave the global economy vulnerable to a new severe downturn. According to data from the Institute of International Finance, in the first quarter of 2019, global debt increased by US$3 trillion, and the total debt accounted for 320% of the global economic output, which was higher than in the 2008 crisis.
It's not that it doesn't explode! The time has not come! What should come will always come!
3. Zhou Jintao's Cycle Theory
Zhou Tianwang should be known by many people. It is not a joke to get rich in life. Zhou Tianwang successfully predicted the subprime mortgage crisis in 2007, proposed the inflection point of the real estate cycle in 2013, and predicted that the Chinese economy would bottom out in the first quarter in 2015. As a result, commodities rebounded at the annual level.
Here comes the point.
Zhou Jintao predicted before his death that 2018 to 2019 will be the year of doom for the Kangbo cycle, the worst stage in 60 years, and it will also be a wealth opportunity, because global assets will reach the final low point.
Bitcoin in Financial Crisis
Bitcoin was born under the background of the financial crisis in 2008, so many people believe that a new round of financial tsunami will trigger a skyrocketing price of Bitcoin. On the other hand, many people believe that Bitcoin may break under the financial crisis. If the crisis comes, it will be the first time that Bitcoin has faced a large-scale financial crisis. To evaluate the true value of an asset, perhaps the financial crisis is the best touchstone.
It's a mule or a horse, let's take it out for a walk. The following will sort out the pros and cons of Bitcoin under the financial crisis.
Opposition: Bitcoin is not a safe-haven asset, and the financial crisis should be affected simultaneously
The value of Bitcoin and all other cryptocurrencies depends on consensus and does not have the basic functions of currency. There are too many things with a limited amount. Under previous financial crises, antique collectibles are facing a sharp drop, and so is Bitcoin.
Bitcoin is a risky asset, because its price fluctuates greatly, so it is not a safe-haven asset at all. Apart from people in the currency circle who buy Bitcoin themselves, who outside the circle will run to buy Bitcoin because of risk avoidance? The risk of Bitcoin is much higher in stocks and houses. The vast majority of players in the currency circle are speculating for huge profits. Once the financial crisis comes, Bitcoin, as a high-risk asset, will be the first to be abandoned.
In addition, the 17-year prosperity of cryptocurrency is the result of the vigorous development of the global financial market. The U.S. stock market has experienced a ten-year bull run, and Bitcoin has also been skyrocketing in the past 10 years. There is no asset that will continue to rise forever.
A new round of financial crisis will completely lead to the collapse of cryptocurrency. Imagine that once the economy is in recession, wages will drop sharply, or even lose their jobs, currency holders will sell their currency to pay real expenses and repay debts, which will usher in a wave of selling , causing the price of Bitcoin to plummet.
Pro: Crisis will be a booster for Bitcoin
Under the crisis, Bitcoin's borderless circulation, scarcity, and decentralization features will shine. Before the global financial crisis came, many countries had already fallen into economic crisis ahead of time, let's take a look at the application of Bitcoin in it.
From the beginning of 2018, Venezuela could exchange 1 U.S. dollar for 10.3 Bolivars. In just 11 months, 1 U.S. dollar could be exchanged for 248,520 Bolivars. The currency has depreciated by more than 20,000 times. In order to maintain government spending, the crazy printing press mode was started, and legal currency was like waste paper.
So why not exchange dollars and gold? At this time, where is the opportunity to exchange these for you? Venezuela has formulated a strict foreign exchange policy and directly blocked the door. These value-preserving assets are extremely easy to be controlled by centralized organizations, so Bitcoin shines in Venezuela. For a certain period of time, Venezuela’s Bitcoin transaction volume far exceeded that of China.
The same is true in Argentina, where the French currency has depreciated sharply and prices have risen day by day. If you want to exchange US dollars to preserve value, there is no door. Argentine banks are a strange existence. They open at 10 am and close at 3 pm. They are closed on Saturdays and Sundays, and their efficiency is extremely low. In addition, the exchange rate is unacceptable. In this case, many Argentines are forced to choose cryptocurrencies.
Under the financial crisis, when the fiat currency system encounters economic instability, it will even further extend to the political and military fields, so it is very easy to be impacted and cause the devaluation of the fiat currency. In this case, gold and US dollars have become national strategic resources, which will definitely restrict ordinary people from holding them. Bitcoin has become the only option, and there is no doubt that in this case, Bitcoin will usher in a surge.
