Delphi Digital states in its new State of Bitcoin study that Bitcoin would benefit most from the promise of central banks around the world to do as required to keep their economies afloat. The Fed will continue to purchase Treasury and agency mortgage-backed securities in quantity needed to secure good market functioning and effective transmission of monetary policy to expand financial conditions and the economy.
The independent research boutique stated that the quantity of monetary and fiscal relief reserved for stimulating the global economies accounts for more than $10 trillion. Such a great sum of newly printed cash would likely spark worldwide inflation. Whereas Bitcoin’s deflationary policy will allow it to thrive.
Bitcoin as a Hedge Against Economic Uncertainty
Delphi Digital affirmed governments worldwide’ extraordinary decision to print that much cash would have significant consequences for the financial system. That form of monetary policy may see some of the strongest currencies lose their purchasing power. If this is long-term, it may be beneficial to Bitcoin as it has happened before.
It is also notable that prior BTC cycles tended to peak when major central bank asset growth decelerates.
Although it may take some time before Bitcoin becomes part of the global financial system, it already performs well against some of the world’s most prosperous currencies.
For example, the pioneer cryptocurrency against the Russian ruble is up more than 44% year-to-date (YTD). Bitcoin displays gains of more than 20% YTD when comparing USD. Against the Brazilian real, it is up by a whopping 74%.
Bitcoin has had impressive success against some of the strongest currencies. This makes Delphi predict that demand for this non-sovereign safe-haven asset will rise dramatically as the risk of widespread currency debasement increases.
Holders Are Growing Exponentially
On-chain metrics, however, show that demand is already growing. Delphi clarified that, over time, smaller wallets are growing the amount of supply. It could be considered a strong indicator of the continued development of new users.
The firm maintains that more than 14% of Bitcoin’s circulating supply nowadays sits in addresses holding less than 10 BTC. Meanwhile, according to Coin Metrics, the amount of BTC owned by exchanges is dwindling rapidly. To be more precise, the amount of BTC BitMEX and Bitfinex hold reached new lows following the March 12th crash. Bitfinex now holds 93.8K BTC, down from 193.9k on March 13th. BitMEX’s BTC supply is now down to 216.0K BTC, down from a peak of 315.7K on March 13th.
Although Bitcoin’s reaction to a new economic crisis is uncertain, some large institutional players believe it might have the power to serve as a hedge. Billionaire Paul Tudor Jones announced that he’s investing 2% of his capital in Bitcoin to protect against the coronavirus havoc.
Similarly, thousands of Argentinians, Chileans, Colombians, Venezuelans, and Egyptians are quick to obtain some Bitcoin due to introducing new economic policies. For that reason and more, Delphi maintains that “Bitcoin is no longer a choice to ignore.