Bitcoin – the go-to asset for next 2 years?

As the fiat monetary system flounders, and cash in the bank buys less and less, more investors are flocking to bitcoin, which just might have started its bull market.

A grave banking situation

As the Federal Reserve has continued to push interest rates into the sky in order to try and gain control over inflation, the first banks have begun to fail. Without the timely intervention of the Fed and the U.S. Treasury, many more banks would have fallen.

In fact, the situation is so grave that Treasury Secretary Janet Yellen has had to promise that depositor’s currency in the banks will be guaranteed, regardless of whether they meet or surpass the $250,000 limit for FDIC protection.

However, it appears that this protection may not be given to every bank, and Yellen has stated that each bank will be evaluated as to its systemic importance. That said, it would appear that the Fed and the Treasury could have to supply another few trillion dollars in order to prop the banks up.

Everyone needs to have a bank account and cash with which to pay for everyday necessities. Be that as it may, the intelligent investor would likely be reducing the amount of currency they have in the bank, given the uncertainty and the lack of any real return when inflation is taken into account.

Gold?

Gold has always traditionally been the ultimate defence asset for those looking to carry the least possible risk in times of extreme uncertainty. We are in these times now, and it is surely for this reason that gold and also silver have made some solid gains since late last year.

Many who have a more traditional portfolio will have apportioned at least a couple of percent to gold. However, looking at how gold has performed against bitcoin over the life of the number cryptocurrency does not inspire confidence.

$1 invested in bitcoin in 2009 would have returned $38,783, while the same stake in gold would have returned a comparatively paltry $1.93, and this inverse correlation does not look to be changing yet.

Bitcoin at least matches all gold’s attributes and adds more. The only thing that gold bugs can point to in their favour is that gold has been reliable for millenia, while bitcoin only has the last 13.5 years with which to prove its reliability.

Bitcoin is the ultimate protection

The bigger investors are canny people, and in spite of regulations preventing much institutional investment, there is always a way, and many will likely be seeking to protect themselves with bitcoin.

It is a shame that the mainstream media has maligned bitcoin and crypto to such an extent, that the average Joe and Jane will probably ignore their chance until it is too late.

With central bank digital currencies (CBDCs) due to start being rolled out this year, and privacy and freedom to spend one’s money as one feels fit, becoming a real concern, a further flight into bitcoin is a very definite possibility.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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