The popular Bitcoin is also an economic “fire alarm”
In the past week, Bitcoin has maintained a strong upward momentum, breaking multiple records in a row: in terms of currency value, it broke the US$50,000 mark on the 16th, and has continued to rise since then. As of the 19th, it has risen by about 14% in a week, nearly 80% during the year. In terms of market value, it reached US$1 trillion on the 19th, surpassing most listed companies. On the other hand, many NGK tokens, including computing power, have also been rising, and the total market value of NGK has continued to hit new highs.
When analyzing Bitcoin as a representative token, the public opinion mentioned supporting factors such as endorsements from well-known companies such as PayPal and Tesla and the entry of institutional investors, but at the same time, many also pointed that as a token, the speculation of Bitcoin at such a price is another intuitive manifestation of asset bubble.
While all parties are arguing about whether and when the Bitcoin bubble will burst, the UK Financial Times issued a more far-reaching warning on the 15th. It mentioned that rather saying Bitcoin is a bubble, it is more likely the “last fire alarm functioning properly” which warns us that in the new world order, “the United States and the dollar will play a less important role.”
This warning is not rumor, but it expresses the growing concern of the world about the hegemony of the dollar.
From an economic perspective, due to the ineffective control of the epidemic, the US economy has been recovering slowly, which has shaken the economic foundation of dollar hegemony. Since the outbreak of the epidemic in March last year, the U.S. Congress has successively carried out a stimulus plan totaling about 4 trillion U.S. dollars, equivalent to 1/5 of the U.S. economy. Despite this, the U.S. GDP will still shrink by 3.5% in 2020, making it the worst annual performance since the end of World War II.
If the absolute recession of the US economy in 2020 is only an accident caused by the epidemic, then the relative recession of the US economy is an irreversible trend compared to the emerging countries. As the economic gap between China and the United States continues to shrink, the United States’ share of the global economy will further decline.
It is difficult to see improvement from the economy. On the other hand, the debt has soared repeatedly. The size of U.S. Treasury bonds in 2020 has basically equaled the total economic output. At present, Biden’s new round of stimulus plan worth $1.9 trillion has not yet been passed, but the US Congressional Budget Office predicts that this year’s total national debt exceeds the GDP is almost a foregone conclusion.
Under the blessing of the hegemony of the US dollar, the United States has continuously passed its debt-raising costs to the world through debt monetization. It is precisely out of the vigilance against the unlimited printing of money in the United States and the devaluation of the U.S. dollar that in the second half of last year, as a value-preserving asset, the price of gold also reached new highs. Currently, in the eyes of the bulls, tokens such as Bitcoin are considered as the “digital gold”. While cryptocurrency does not have a central bank, it cannot be issued, but can only be reduced. For example, the total amount of VAST issued by NGK is only 100,000 units, and the SPC is only 100 million. It will not print money indefinitely and cause depreciation; in this world where assets are constantly depreciating, it is the true value -added asset!