We are in uncharted waters. The federal government is likely to announce badly needed stimulus checks in the near future. The Federal Reserve has already announced that it’s injecting trillions of dollars in liquidity into the market – and more is expected.
Bailouts are a near certainty for airlines, hotels and (hopefully) small businesses. And needless to say, banks will be bailed out if necessary.
The reason all this is needed is simple: We have entered a very serious debt crisis. Corporations are leveraged to the hilt. And COVID-19 pricked the bubble in a very nasty way.
I believe most major currencies will be debased to the extreme, the dollar included. I don’t know exactly how it will play out, but it will almost certainly involve Modern Monetary Theory (more on Modern Monetary Theory here). The Fed will print new money to pay the (very steep) bills.
This is the world that bitcoin was created for. This is why we need independent, decentralized, scarce money.
And although bitcoin has fallen so far during this crisis, I remain very bullish over the next year and beyond. Once the realization that we’re going to print unimaginable amounts of money sets in, I believe hard assets like bitcoin and gold will do extremely well.
Bitcoin is a riskier bet than gold, but it has more upside. I like both bitcoin and gold.
I suspect we will look back on the current correction in bitcoin and precious metals markets as an incredible buying opportunity.
If you’re looking for more context, here are two relevant articles I’ve written over the past year or so.