Since the crypto bubble of 2017 that brought Bitcoin from under $1,000 to $20,000 in a year, analysts have been wondering what will spark the next rally.
Many have put their faith in the Bitcoin block reward halving, which came to pass earlier this week, but more and more are becoming convinced that central bank and government liquidity is the “prime catalyst” to start a bull market in both Bitcoin and gold.
Fund Manager: “Long Bitcoin and Gold” Due to Money Printing
Macro hedge fund manager Dan Tapiero, just a year or so after seriously entering the Bitcoin space, is calling for investors to “long gold and Bitcoin” because of a single chart seen below.
The chart is of the U.S.’ M2 money stock, or the value of cash-like balances and securities, over the past 13 years. What’s notable about is it is that the year-over-year growth of the metric recently spiked to 21.6% as of May 4th, the highest on the chart and purportedly the highest ever. Tapiero explained:
“One of the most incredible and important charts I have seen in 30 years. […] Speed and size of move in liquidity creation will never be seen again. March was max fear/worst case. Long gold and Bitcoin.”
One of the most incredible and important charts I have seen in 30 years.
Suspend existing macro analytical frameworks for understanding world markets.
Speed and size of move in liquidity creation will never be seen again.
March was max fear/worst case. Long gold and Bitcoin. pic.twitter.com/ZxuQEwd278
— Dan Tapiero (@DTAPCAP) May 15, 2020
Bitcoin programmer and educator Jimmy Song noted that the exact growth in the supply of the U.S.’ M2 money stock is 15% over the past three months, rising from $15.4 trillion to $17.7 trillion, which annualizes to 75%.
Tapiero’s comment came hours after a similar assertion made by Bloomberg Intelligence senior commodities analyst Mike McGlone. He said that while central bank liquidity will aid equities, it will especially help “quasi-currencies” Bitcoin and gold:
“Central-bank liquidity may restrict the equity bear, yet it’s a prime catalyst to relaunch bull markets in quasi-currencies.”
It’s a Popular Narrative
It isn’t only Tapiero and McGlone that have picked up on the narrative of money-printing and applied it as a way to find or identify value in adding Bitcoin to one’s portfolio.
Over the past two weeks, legendary macro investor Paul Tudor Jones, worth in excess of $5 billion, has seriously delved into Bitcoin for the first time.
The reason: he fears what is playing out across the global economy is “The Great Monetary Inflation,” whereas there is an “unprecedented expansion of every form of money unlike anything the developed world has ever seen.”
To him, Bitcoin is a hedge against such inflation because it has the characteristics of a store of value, the most notable of which being its fixed supply cap of 21 million.
Elon Musk — the multi-billionaire chief executive of both Tesla and SpaceX — joined in on the money-printing train too.
As reported by NewsBTC, the technologist said on Twitter on Friday that he thinks the massive currency issuance” by governments and central banks is making Bitcoin “look solid in comparison” to fiat money.
Musk made this comment in response to “Harry Potter” writer J.K. Rowling, who attempted to understand the what and why of Bitcoin for the first time ever. He didn’t convince Rowling but managed to spark a positive response from the cryptocurrency community, which branded him as a key proponent of Bitcoin for the umpteenth time.
Pretty much, although massive currency issuance by govt central banks is making Bitcoin Internet money look solid by comparison
— Elon Musk (@elonmusk) May 15, 2020
How exactly these trillions of fiat dollars worth of printing, worth of fiscal and monetary stimulus, will translate to the Bitcoin market, though, remains to be seen.
Featured Image from Unsplash