I’ve been writing conservatively, with tongue in cheek, over Bitcoin’s recent rise to $85,000. Pundits are tripping over themselves to predict $90K by April, fueled by narratives of decoupling from traditional markets and a global stimulus bonanza. Let's pump the brakes. As a blockchain specialist and frequent traveler to the UK, I must say, I have seen these cycles before and this exuberance seems… hasty.
Halving Doesn’t Guarantee Instant Riches
Now everyone’s looking to the upcoming halving as a sure thing rocket boost. The idea is simple: supply gets cut, demand stays the same (or increases), and price goes up. Textbook economics, right?
The halving, to a large extent, is already priced in. As we’ve tried to demonstrate here, it’s not some magic wand that magically produces treasure. Miners, who control a huge portion of Bitcoin (allegedly nearly 1.8 million BTC), aren’t robots. They're businesses, and they'll adapt. Some will get a lot smarter and be much more efficient, some will sell off their blockchain holdings to pay their bills.
That brings me to an unexpected connection: consider the UK's small business landscape. We hear a lot about the pluck of the British businesswoman or man, their willingness to do whatever it takes. Even the smartest, toughest entrepreneur can’t do much when they reach their limits. We know that rising costs and shrinking margins can derail even the most well-intentioned efforts. Miners are facing that same pressure. Do not assume that they are going to hodl forever because of some ideological love for an asset. After all, their decisions are made by the bottom line first and foremost, just like any other business.
Central banks are set to open the floodgates on a new wave of stimulus. This action will devalue fiat currencies and force investors to flee to Bitcoin as a hedge. China’s stimulus is already fueling powerful growth in the existing markets. At the same time, the ECB’s rate cuts are creating the conditions for a Bitcoin boom.
Global Stimulus Is a Slow Burn
Stimulus is not instant gratification. It's a slow burn. Take the UK’s own experience with monetary easing in the wake of the 2008 crisis. It took years for those measures to produce substantial down-stream impacts in the rest of the economy. Not everyone shared in the prosperity equally.
Moreover, what do you do when the stimulus fails to have the desired effect? Wall Street investment banks are already cutting inflation outlooks in wake of the trade war. What if the stimulus packages don’t make up the damage to GDP? The narrative quickly flips from "Bitcoin is a hedge against inflation" to "Bitcoin is a risky asset in a recession."
The US dollar is losing value at the worst possible moment, as Trump goes on the record blaming the Fed. This combination is interpreted as a bullish signal for Bitcoin. The thinking goes that as the dollar weakens, Bitcoin naturally looks like a better investment to foreign investors.
Fed's Actions Misinterpreted Always
The market is misinterpreting the Fed's actions. My read of recent US initial jobless claims data was said to confirm “solid” national labor market. So, what would prompt the Fed to suddenly change course and become more accommodative? It doesn't add up.
And even if the Fed does loosen monetary policy, there’s no assurance that the new money finds its way into Bitcoin. It can just as easily flow into other non-commod asset types. Just take a look at gold, for instance, which has been recently rocketing to all-time highs. Bitcoin's performance isn't even matching gold's.
This is the big one, and it’s the most critical for those of us across the pond in the UK and Europe.
Regulation: The Unseen Elephant in Room
The regulatory landscape is still incredibly uncertain. As a patchwork of jurisdictions move to embrace crypto, others are retreating into red tape. The UK, as just one example, has been especially critical of these unregulated crypto exchanges.
Think of it like this: imagine building a beautiful house on land that you don't own. We all know that you can spend your time, money, and energy in the development of something flawless. The landowner may arrive at any time and destroy it. Bitcoin, too, I think is very much at that point. It’s a fascinating technology with enormous potential, but like all innovation, its future is completely in the hands of regulators.
This is where the anxiety creeps in. Second, what if regulators just really do want to crack down on Bitcoin. What happens if they ban it outright? And when it does, the price will crash much quicker than you can say "stablecoin."
Don’t take this as me turning against blockchain Don’t get me wrong, I’m a believer in the long-term potential of blockchain technology. The unbelievable excitement around Bitcoin right now seems totally removed from reality. 9 Important Piece of Info The assumption that it will reach $90K in April is, again, at least in my view, overly rosy.
My advice? Be skeptical. Do your own research. And don’t forget, past performance is no guarantee of future results. Investing in Bitcoin is extremely risky, so don’t invest any money you can’t afford to lose. The true FOMO must not be fear of missing out on financial returns. Instead, it should be the prospect of losing your hard-earned capital.
Don't get me wrong, I'm a believer in the long-term potential of blockchain technology. But the current hype surrounding Bitcoin feels detached from reality. The idea that it will hit $90K in April is, in my opinion, overly optimistic.
My advice? Be skeptical. Do your own research. And remember, past performance is not indicative of future results. Investing in Bitcoin is inherently risky, and you should only invest what you can afford to lose. The real FOMO shouldn't be the fear of missing out on gains, but the fear of losing your hard-earned capital.
