Bitcoin's (BTC) forward march attracts Citibank's attention. The third US bank, through one of its directors, Thomas Fitzpatrick, suggests that Bitcoin could surpass $300,000 by the end of next year 2021.
The global head of CitiFXTechnicals product explained in a report entitled "Bitcoin: Gold for the 21st Century". Here are the key points.
From Bretton Woods to Bitcoin
The paper begins by comparing the current Bitcoin boom to the emancipation of gold from the 1970s. A pivotal period that precipitated the rise of the barbaric relic after 50 years at between $20 and $35.
"This period (the 1970s) marked a structural change in the modern monetary regime. The suppression of the orthodox relationship between gold and fiat money led to fiscal indiscipline, deficits and inflation. »
Regular readers of Thecointribune know the short story but it is always interesting to recall what changed in the 1970s: the roots of the rise in gold prices from the 1970s go back to the Bretton Woods agreements signed in 1944. The latter governed the international monetary system until 1973. They stipulated that only the dollar would be convertible into gold and that all other currencies would have a fixed exchange rate with the US currency. Each country was then required to do what was necessary to balance its trade balance so that its exchange rate would not move.
The dollar thus became "as good as gold" and replaced gold in the foreign exchange reserves of Central Banks around the world. But this "Standard Dollar" collapsed when European nations began to demand gold in exchange for these dollars that were devaluing too quickly. After losing half of his gold stocks, President Nixon announced in 1973 the end of the convertibility of the dollar into gold. The Bretton Woods Agreement was shattered and a floating exchange rate was introduced.
This new monetary system will always be dominated by the dollar... The reason being that the United States arranged for the bulk of European nations' imports to be made in dollars. And because it was oil, Saudi Arabia simply had to be forced to sell its oil exclusively in dollars. That was the birth of the fiat currency regime as we know it and the petrodollar... Since then, gold has gone from $35 to $2,000 an ounce and the dollar has lost 98% of its purchasing power... #inflation
"Bitcoin is the New Gold
For Citigroup's banker, we have recently witnessed a new change in the monetary regime characterized by zero interest rates and debt buybacks (Quantitative Easing). He believes that the FED's decision to let inflation exceed 2% is the most important paradigm shift since the abandonment of the Gold Standard (Nixon) and even since the announcement of Quantitative Easing.
"Historically, this has benefited gold and will probably always be true. However, it should be noted that gold suffers from certain limitations. Storage; THE difficulty to cross borders; Its paper equivalents (the Futures...) which may not reflect the true rise in the value of gold", says Tom Fitzpatrick before adding that "Bitcoin is the new Gold" :
"Bitcoin is an asset with a limited supply. It is digital. It crosses borders easily and offers a certain opacity (pseudonymous). This last point is, I think, useful. The debt will have to be paid one day. Either directly or indirectly. "Directly" means that sooner or later it will have to be cashed and the money will have to be taken somewhere (tax). Although Bitcoin could be more and more regulated, it is a natural safe haven to avoid being the fall guy. A shift to "Indirect" cash will occur through the devaluation of the currency by generating strong nominal growth (inflation). This amounts to defaulting in a soft way. I don't believe in a violent default, especially in a world where holding the international reserve currency is so crucial. »
CBDC - "Double Hedge Sword
The author of the report continues with some very interesting remarks about the CBDCs of the Central Banks:
"Central Banks are increasingly discussing the digitalization of currencies (end of cash). This is a double-edged sword. On the one hand it will create a very efficient mechanism to distribute money for free. But on the other hand, it makes the confiscation of money easier (negative interest rates). Both scenarios would be positive for Bitcoin. We would have in the 21st century (Bitcoin vs. CBDC) the equivalent of what happened in the 20th century (Gold vs. Fiat paper)".
This anticipation is actually not far-fetched. Especially if one assumes that Bitcoin is indeed increased gold. We will add that one can pay in satochis but not in gold dust... If the 21 million Bitcoins were worth as much as all the gold in the world, a BTC would be worth $550,000...
Post a Comment