Despite Trump's recent pivot on tariffs, the equity markets remain unstable, with the S&P 500 declining over 3% on April 10th. Rising yields on 10-year US Treasuries further indicate a looming economic uncertainty. This scenario could lead to a 'Trumpcession', which I define as a politically induced recession with persistent inflation risks.
Bitcoin (BTC-USD) was launched in January 2009, during the tail end of the Great Recession. Many believe this was no coincidence; Bitcoin emerged as a response to the financial collapse orchestrated by Wall Street's greed. Today, Bitcoin has transitioned from a decentralized payment system to a potential global reserve asset.
Bitcoin's Transformation: From Currency to Reserve Asset
In 2018, Bitcoin underwent a significant hard fork, resulting in Bitcoin Cash (BCH-USD). This fork highlighted a pivotal moment in Bitcoin's narrative, marking its shift towards being viewed as a reserve asset rather than a global currency. Since then, Bitcoin's transaction rates and active addresses have stagnated, suggesting a shift in perception.
Comparing the Great Recession and 'Trumpcession'
The Great Recession was triggered by a housing market bubble and financial system failures. In contrast, the current economic turmoil stems from questionable political decisions. Both crises fostered public distrust—in the financial system during 2008 and in the political system during a potential Trumpcession. This distrust might push Bitcoin towards becoming a mature reserve asset or lead it to irrelevance.
The Bull Case: Bitcoin's Potential During a Trumpcession
If the Trump administration continues its spending patterns, this could be bullish for Bitcoin. Historically, Bitcoin has shown a high correlation with money supply. A Trumpcession could lead to a global economic cooldown, prompting central banks to return to low rates and relaxed monetary policies—potentially including Quantitative Easing.
Bitcoin’s neutrality and technical superiority over gold may attract institutional investments as a hedge against political uncertainty. The current climate of distrust may encourage nations to consider Bitcoin as a viable reserve asset, alongside gold.
The Bear Case: Risks in Bitcoin's Adoption
Despite its potential, Bitcoin has yet to fulfill its promise as a global payment system. Its association with the Trump administration could hinder its acceptance by institutions and governments. Additionally, Bitcoin's correlation with risk assets continues to be a concern, as it has underperformed compared to gold.
A key risk is that Bitcoin's maturity relies on unpredictable human behaviors. The current political climate may deter institutions from adopting Bitcoin as a reserve asset.
In summary, while a Trumpcession could present opportunities for Bitcoin, significant risks persist. I maintain a bullish outlook on Bitcoin, rating it a STRONG BUY at current levels, with an estimated upside potential of up to $650,000 per coin.
Comments
Join Our Community
Sign up to share your thoughts, engage with others, and become part of our growing community.
No comments yet
Be the first to share your thoughts and start the conversation!