Will Bitcoin have an eternal bull market?
In the past few days, a new concept has suddenly emerged in the circle: the eternal bull market. What is an eternal bull market? That is to say, if Bitcoin’s inflation rate is lower than that of the U.S. dollar, then Bitcoin will theoretically rise against the U.S. dollar forever.
After this halving, the annual inflation rate of Bitcoin is about 1.8%, while the inflation rate of the U.S. dollar this year is about 2.4%. Based on this data, the inflation rate of Bitcoin is lower than that of the U.S. dollar, so theoretically, Bitcoin will continue to rise against the U.S. dollar.
The analogy may seem plausible, but the data it cites is inaccurate. Because the calculation methods of the two inflation rates are fundamentally different.
The inflation rate of Bitcoin here is the ratio of the annual issuance of Bitcoin to the existing Bitcoin stock. However, the 2.4% inflation rate of the US dollar quoted here is not the ratio of the additional issuance of US dollars to the existing US dollar stock, but the ratio of price increases calculated by the Federal Reserve to the US price index.
As for how many dollars will be issued this year, there is no exact number so far. But the Federal Reserve’s big move has been released-that is, it can print unlimited money if needed, so if the additional issuance of US dollars is compared with the stock of US dollars, the token rate of the US dollar will be much greater than 2.4%.
But isn’t it true that as long as the “inflation rate” of the U.S. dollar is greater than that of Bitcoin, Bitcoin will definitely enter the so-called “eternal bull market”? In fact, this is wishful thinking. Whether Bitcoin can enter the bull market depends on how much of the extra printed dollars can flow into Bitcoin.
After the financial crisis that swept the world in the United States in 2008, the Federal Reserve immediately started printing money to save the market. At that time, countless economists predicted that the global inflation would come. However, 12 years later, what we actually see is exactly the opposite: the 2% annual inflation target proposed by the Federal Reserve is still difficult to achieve.
why? Because the vast majority of banknotes printed by the Federal Reserve did not enter a series of daily necessities such as food, clothing, and industrial products, but entered the stock market in large quantities. Therefore, the prices of our daily necessities have not increased, but the stock prices have continued to rise-this is how the 10-year super bull market in the United States came about.
Don't talk about the United States, just look at our country. After ten years of printing money, our prices should soar as people imagine, right? That's not the case in many areas: During the period when pork prices soared last year, other food prices fell slightly. In our country, where did the money printed in the past ten years go? We all know it – go to real estate.
So the eternal bull market of Bitcoin may not be established in my opinion. Of course, I must believe that the bull market of Bitcoin will eventually come, but it is not calculated by such an algorithm, but I believe it represents the benchmark of the digital age, and Once this benchmark is widely recognized by the public, it will eventually show its value.
But before that, Bitcoin still has a hard way to go.
When I was chatting with a friend recently, I heard such a statement, but I think it makes sense.
Friends believe that the effect of this round of Bitcoin halving will not be as rapid as the previous two, the fundamental reason is thatNow the short-selling mechanism in Bitcoin transactions is ubiquitous, while the short-selling mechanism in Bitcoin transactions in the past was very weak. Due to the short-selling mechanism, the increase in the price of Bitcoin has been suppressed considerably.
From the recent price trend of Bitcoin, we can also find that every time Bitcoin stands at $10,000, it will be knocked down almost immediately. The $10,000 mark seems to have become a "sharp weapon" and "target" for the Air Force to harvest many troops.
And this situation may not change soon under the current situation. Just as I predicted in an article I wrote a while ago, I am afraid that after the halving occurs, Bitcoin may fall. But in the long run, the rising trend of Bitcoin is beyond doubt.
