Rajat Soni: European Central Bank Analysts Think Bitcoiners Will Massive Benefit From Price Appreciation
Bitcoin has appreciated about 60% year-to-date. Amazingly, bitcoin’s returns have beaten out gold and the stock market. Yet there could be even more upside ahead.
For starters, bitcoin remains well off its highs in the spring. The issuance of 11 bitcoin ETFs made the asset easy for investors to own. Prices then backed off. But bitcoin’s halving in the spring means less new crypto is being mined.
These factors point to continued demand and limited supply. The European Central Bank expects bitcoin prices to continue to increase over time. Those who invest in bitcoin now can benefit from that trend. Those who continue to stay in fiat currency will lose purchasing power to bitcoin over time.
Meanwhile, early bitcoin investors have already seen large price appreciation in the 15 years of bitcoin’s existence. With the last bitcoin to be mined in 2140, it remains in its early stage.
Originally, bitcoin was created as a form of digital money meant for online transactions. However, in a fiat system, bitcoin has best functioned as a savings mechanism.
Its total maximum supply makes it ideal for savings. And that’s why the price has appreciated significantly relative to fiat currencies.
Bitcoin also creates a free market for money, relative to the money created at will by central banks. Central banks have a propensity to weaken their currencies over time. Bitcoin offers an escape from that policy.