Crypto and the Great Wealth Transfer 

by | Oct 25, 2020 | Industry | 0 comments

The global economy has been feeling the pinch of COVID19 in the better part of this year. Oil prices dropped below zero for the first time in history as the world’s leading economies showed cracks in their system. As countries worldwide open up, financial analysts and economists strongly feel that blockchain and the crypto economy will thrive and create a new class of millionaires.

Cryptocurrency- The Story of the Next Decade

The impending economic depression has created many macroeconomics and market strategies to forecast the asset classes that will thrive in inflation in this uncertain period. Of course, barter trade will take the day-especially in underdeveloped and developing economies. Still, many think that the safe-haven asset gold will be far more valuable than it is currently.

Some analysts feel that the crypto economy will be another safe-haven hosting those trying to run from the financial storm. Since the Corona Virus outbreak, digital assets have seen an increased interest from governments and institutional investors, and even duped “the story of the next decade.” Global Macro Investor CEO Raoul Pal projects bitcoin to hit $1m in the next five years.

While we should congratulate various governments for putting up the most aggressive measures to provide a stimulus for their economies, the extent of the stimulus and printing of more money, and the subsequent debt makes analysts dump. Of course, the economic stimulus will be accompanied by inflation and pressure on fiat currencies’ value. This reflects another bull case for the crypto economy.

Crypto Could Seize 3-5% of the Gold Market

Rothko Research, a financial think tank that discusses global macro themes, predicts bitcoin could easily capture 3-5% of the global gold market ($9-10 trillion) in 2020. During the 20008 financial crisis, many analysts forecasted that double-digit inflation would make gold to skyrocket. Despite that inflation’s outcome, Rothko believes “this time is different,” especially with the “combination of both monetary and fiscal stimuli that will be inflationary in the medium term.” Rothko analysts say:

“We saw that gold has already been trending higher against all currencies, and we do expect the trend to start in the crypto market as well. We think that Bitcoin will eventually capture 3 to 5 percent of the gold market share in the medium to long term. With approximately 190K tons of gold available above ground, the total market cap of gold is USD 10.5 trillion (for a spot price of $1,730 per ounce). Hence, with the total number of mined bitcoins at 18.3 million, a 3 to 5 percent of the total gold market cap would price a Bitcoin unit between $17,240 and $28,740.”

Bitcoin is ‘The Greatest Wealth Transfer of our Lifetime’

The current bullish belief has been the case for years for blockchain and crypto believers. In 2019, the crypto proponent Rhythm Trader (RT) said that the world is experiencing the “greatest wealth transfer” of our lifetime. RT described how millennials had lost trust in banks. He highlighted Etoro’s recent study that shows Millennials trust “cryptocurrency as an asset-at least, more than they do the stock market run by traditional Wall Street.”

“The survey, commissioned by the independent research firm Provoke Insights, asked 1,000 online investors in the U.S., ages 20 through 65, about stock exchanges, cryptocurrency exchanges, and 401(k)s. Forty-three percent of millennial respondents said they trusted cryptocurrency exchanges more than U.S. stock exchanges,” RT’s report disclosed. RT’s paper is very similar to Global Macro Investor Raoul Pal’s outlook. The study concludes by highlighting:

“When it comes down to this “Great Wealth Transfer” of Boomers to Millennials, we know one thing for sure, Bitcoin is positioned as a vehicle for the storage of newly acquired wealth. Millennials have demonstrated a strong trend of embracing the digital age with open arms while at the same time turning their backs towards the traditional financial system.”

What is your opinion on crypto investors experiencing a significant wealth transfer? Keep the discussion going via the comment box.

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