Traditional economists have often compared bitcoin and gold prices over the years, with some major investors giving bitcoin the title of “fastest horse in the race” amidst a rapidly evolving financial landscape. This is our complete article for a Bitcoin price prediction 2030.
A looming economic downturn
In his widely cited thesis that “cash is trash”, hedge fund billionaire and legendary investor Ray Dalio talks about a narrative bitcoiners are all-too familiar with.
Often likening current events with the 1930-1945 period, Ray recently defended his long-term skepticism towards cash, pointing towards historical precedent.
Now, like in the 1930-1945 period, interest rates have hit 0% and printing money and buying financial assets doesn’t get the money and credit to go where policy makers want it to go, so the central government borrows a lot and the central bank prints a lot of money and creates a lot of credit to buy this debt, which the central government spends to target what they want to save
Money printing is problematic
In an article on LinkedIn, Dalio argued that this money printing and government borrowing has sowed the seeds for inflation. And this would be a major departure from the persistently low inflation that has marked the last two decades.
To his credit, the Federal Reserve has unleashed a virtually limitless bond-buying program to ease market pressures and cut federal-fund rates to 0% and 0.25%. Earlier this year, US President Trump signed an astounding $2 trillion relief package for companies affected by the lockdown.
Such financial relief packages set the stage for continued proliferation of what is effectively corporate socialism. Speaking about the consequences of these actions, Dalio listed several reasons why a big financial squeeze is imminent.
I think that the [low-inflation] paradigm that we are in will most likely end when a) real interest rate returns are pushed so low that investors holding the debt won’t want to hold it and will start to move to something they think is better and b) simultaneously, the large need for money to fund liabilities will contribute to the ‘big squeeze.
At that point, there won’t be enough money to meet the needs for it, so there will have to be some combination of large deficits that are monetized, currency depreciations, and large tax increases.
He went on to warn of the implications of this rapidly evolving dynamic, saying that “these circumstances will likely increase the conflicts between the capitalist haves and the socialist have-nots.”
Dalio believes in gold & remains skeptical on bitcoin
While his general thesis is strikingly similar to what many bitcoin holders believe, Dalio isn’t sold on bitcoin yet. Instead, he sees gold as a safe-haven investment.
However, he doesn’t rule out the prospect entirely – indicating that he is open to being convinced. When asked if bitcoin should be included in a portfolio to hedge against economic downturn, Dalio said the following back in January:
Dalio then went on to say that central bankers and others will probably hold gold reserves. He said: “There are two purposes of money: a medium of exchange and a store-hold of wealth,” explained Dalio. “And Bitcoin is not effective in either of those cases now.”
Notably, Dalio’s peers such as Paul Tudor Jones and Max Keiser believe that he is completely off on bitcoin, with Max upping his price prediction for bitcoin to $400,000 recently. Clearly, Dalio is missing something.
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The tables are turning
Since Ray gave his views on bitcoin, however, several well-known Wall Street gurus have pointed out that bitcoin has since answered his questions.
Indeed, Max Keiser has time and again talked about the probability of a global hash war erupting due to bitcoin’s game theory and the emerging ‘arms race’ for countries to store bitcoin.
In fact, Max explained in a tweet that he believes that PayPal’s rush into the crypto industry signals that a global hash war is imminent. Notably, the timing PayPal and Venmo entering the space bolsters the case for increasing interest in the precious digital asset.
Max is effectively offering an explanation to Dalio’s indecisive tone on bitcoin:
Bitcoin’s built-in game theory strikes again. Paypal, seeing SQ [Square] making a killing with BTC, is forced to take on BTC or suffer huge competitive consequences. Global Hash War is coming!
In a not too dissimilar vein, Macro investor Paul Tudor Jones has placed nearly 2% of his assets into bitcoin as a hedge against the very inflation that Dalio highlights, saying that it reminds him of the gold play in the 1970s.
Commenting on the trillions of dollars being printed, Pual said:
It has happened globally with such speed that even a market veteran like myself was left speechless, We are witnessing the Great Monetary Inflation — an unprecedented expansion of every form of money unlike anything the developed world has ever seen. Bitcoin reminds me of gold when I first got into the business in 1976.
Bitcoin to $1,000,000 by 2030 ?
If the trajectory of today’s policies remains the same, it’s conceivable that the impending bout of inflation could turn into hyperinflation. Once this hits as many economist are expecting, fiat currencies will exponentially lose purchasing power in the real economy.
As per the above graph, the Federal Reserve’s M2 Money stock has seen an exponential rise in just a matter of months – a dramatic increase over what happened in the past financial crisis.
Given the almost incomprehensible amount of money being pumped into the system, it’s conceivable that a single bitcoin will eventually cost hundreds of thousands of dollars while achieving the “store of wealth” narrative in mainstream consciousness.
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In a world were fiat currencies continue to reach parity with a single satoshi, the clock is ticking and the game is on for a $million-dollar bitcoin.