In this particular article, we embark on the reckless feat of predicting the future. Of course, the chances of getting it right are minimal. But let’s play the puzzles a little. And if we happened to get some things right, it was a fluke. The future is impossible to predict. What we can actually do is make assumptions about the future with the little information available. We don’t know much, but we know something. And we can bet on these probabilities. Actually, we’re not going to talk about the future. But let’s pretend. We speak of the future with poetic license. The future as an expectation. Bitcoin in 2021. What can we expect?
Big question: will we exceed $ 50,000 in 2021? Well it is possible. In fact, it is very likely if the current craze continues for the rest of the year. Of course we’d need more ads. I mean more institutional shopping, more acceptance, and more FOMO. Passing an EFT would be fame. Any instrument that more effectively channels the entry of institutional capital into the world of cryptocurrencies will support the price boom.
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On the other hand, a possible setback could come from the regulatory area in the US and Europe. For now, this danger is hypothetical, as nothing in particular poses a particular threat. The authorities are very busy solving problems related to the coronavirus crisis. And the most popular villain right now are big tech companies like Facebook and Google. Politicians want to cut off some heads to please the bloodthirsty public. A giant has to fall to create the illusion that inequality is a problem that worries politicians. At the moment, Bitcoin is not on the scapegoat list.
The truth is that everything indicates that 2021 will basically be an extension of 2020. At least in the first half of the year it won’t be that different. Will unemployment return to 4%? Will inflation exceed 2%? Are the financial markets overvalued? Not yet. From the second half of the year, things can start to change. However, in the first months of 2021 the situation will be very similar to the last months of 2020.
The coronavirus accelerated several processes and that will continue in 2021. The deglobalization of the world, the digitization of the world and the deepening rivalry between China and the United States. All of this in the context of an increasingly unequal world. Tourism will decrease, migration will decrease and remittances will decrease. However, online commerce, digital payments and teleworking will continue to increase dramatically.
This recovery is largely K-shaped as it is primarily a service sector crisis. The poor and middle class have suffered enough. Small businesses have suffered a lot. And cyclical companies have suffered a lot. But the rich, the financial markets, bitcoin, and the tech sectors have benefited greatly during this time.
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The Federal Reserve’s monetary policy has mostly benefited the financial markets as almost all of its liquidity has been used to purchase financial assets. While consumer price inflation has not risen sufficiently, it is limited to goods and services. That is, at the cost of life. Obviously, this doesn’t include the prices of assets like stocks and Bitcoin. In other words, the stimuli were used to make buybacks. Big capital received a lot of money, but everything stayed in the financial markets and did not go into the real economy.
Of course, that doesn’t mean the Federal Reserve was wrong. The Fed did the only thing it can do. Here the big absentee was the fiscal stimulus. In other words, public spending. Aid in this sense has been very shy due to the doctrine blockade of the Republicans. A new aid package is currently being discussed that will add some liquidity to the economy. However, because of the Republican blockade, it’s more than a major incentive, a small relief that won’t have a big impact. Of course, the packages could be a little more generous for next year despite the Republicans.
Now the administration of Joe Biden. On the monetary side, a change in administration does not have much of an impact on Federal Reserve policy. The prices stay the same. And almost everything will stay the same on this front. For a long time, at least. A change was observed in the financial sector. However, I fear we won’t face a very dramatic change as Biden takes the White House with a Republican-controlled Senate. I mean the Republicans are going to stop everything. Aside from Biden’s promise to work with both parties in a country as polarized as the United States, this is easier said than done.
Obviously, Joe Biden is not the socialist Trump introduced for electoral strategy reasons. Joe Biden is not a newbie. It’s not about putting a label on it and that’s it. The subject has its story. And his story clearly says he is temperate. OR be a centrist. In Biden’s case, I don’t think the danger is a radical shift to the left. I think the danger here is that an administration is rich in words and poor in action. That is, do nothing. Inaction. That said, a lack of leadership can be the real problem. Biden’s foundation is anti-hulls. But 2021 needs something more. Rebuild required. Alliances, consensus and unions are needed. Does Biden have what it takes? Do you have that power Or is it just talk?
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For ideological reasons, libertarian bitcoins are crazy about seeing inflation through the roof to say they were right. What you want is an inflation saying the Federal Reserve made a mistake and the fiat system failed. Hence, Bitcoin is a better option. But falling for it is absurd. I would say pathetic. What’s the point The best that can happen to us right now is a picture of low inflation, high unemployment and lots of monetary incentives. Because that will bring enough liquidity that the price of Bitcoin can top $ 50,000 this year.
On the contrary, if inflation rises, the Federal Reserve will automatically be forced to withdraw liquidity from the system using all the instruments at its disposal. ANDIn other words, you have no choice but to strengthen the dollar. And that would mean the collapse of the financial markets. In other words, Bitcoin couldn’t hit $ 50,000 with the same ease. In all fairness, Bitcoin is doing very well with the tech sector in this story. The libertarians’ desire to see inflation to say they were right is quite childish. If inflation gets out of hand, it doesn’t mean the system is down. On the contrary, the system works perfectly. Full employment has been achieved and it is time to withdraw liquidity by raising interest rates. Will that happen in 2021? I do not believe that. In 2022-2023? Could be.