What’s going on, everyone? My name is Nicholas Merten here data ash and today’s March. 31st of 2020. Well, folks, I hope y’all are having a fantastic day wherever you are. And in today’s video, I want to spend some time to talk about the two key elements that I think are truly going to drive Bitcoin’s price upward going into 2021 and 2022 as we really enter into the next cycle for cryptocurrencies and enter into a macro environment that really fosters the adoption of bitcoin, both for traditional investors and for everyday investors. So I want to go ahead. We’re going to be diving into these things real quick and trying to summarize why they’re so key as we focus in on the long term picture right after our quick sponsor. Our sponsor for today’s episode is Tax. The IRS recently released new forms in 2019. 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And that is quantitative easing, which is the printing of new money, which manifests into the symptom of inflation. Basically the devaluation of your purchasing power. And along with that as well, the use of managing interest rates, therefore pushing interest rates lower and inevitably reaching negative interest rates, which just about a decade ago was an unthinkable reality. That is now the current reality for many countries across the world. So we’re going to be talking about these two things. I know many of you’ve probably heard me mention this, but I want to go ahead and try to really summarize why they’re not only dramatically important, just alone on themselves and the ramifications that come with them, but why an asset like Bitcoin as well as other hedges of gold and silver that don’t really yield anything as an asset are beneficial in this kind of environment where these are the current realities in the sense of how central banks like the Federal Reserve are managing monetary policy. All right. So let’s go ahead and have a bitcoin here. Right. We first need to understand the time period for bitcoin and we need to understand some of the fundamentals for Bitcoin, as many of you might already know. Bitcoin has a supply schedule. It supplies schedule is basically the predictable periods of time where we know there’s going to be a new issuance, a certain amount of issuance of new Bitcoin into Bitcoin’s overall supply. Unlike a central bank, unlike the monetary policy of the U.S. dollar or other world reserve currencies like the euro, we don’t know exactly when there’s going to be new issuance of those currencies. A central bank like the Fed, for example, for the United States might do what they did over the past couple of weeks where they’ve been injecting over a million dollars every second into the global economy, basically printing enough money for a new person to be a millionaire every second. And this devalues the purchasing power of your dollars, whether you have your dollars in a bank account, whether you have it under your mattress, if you have it in cash, you’re losing purchasing power, plain and simple. This is what leads prices to go up in many cases. That’s usually doing a little bit more to velocity, which is a topic for another time. But it also plays a big role in inflation. And we can see here, again, with a million dollars being created every second in the U.S., you have to wonder what’s happening. And the European Central Bank and the People’s Bank of China and the Bank of Japan, who are probably going to be playing catch up just like the United States in stimulating their markets and printing more money. And for bitcoin here. Right. We don’t have that. Bitcoin doesn’t have a magic wand that can just print more money. In fact, in Bitcoin’s network, it is programmatically functioned to be able to only produce a certain amount of bitcoin into the new supply. And inevitably, every four years that reward gets cut in half. All right. And we’re about to get into a period of time where we’re about to see a split and a having of the reduction and reduction of the overall bitcoin. They’re issued every ten minutes on the network. So that’s coming up here in May. So we’ve got this perfect time period where we’re going to see a supply shock to Bitcoin, which might sound bad, but it’s actually a good thing. It’s going to probably lead prices higher in the long term, because if demand generally keeps up where it is right now and we have the supply on the available market. Be cut in half. You’re going to see a price discrepancy where prices start to accelerate higher because in this case, if the demand or in this case the buy-side pressure is maintaining and the sell-side gets cut in half and prices maintain about the same. This is going to lead prices higher. It is simple supply and demand economics. Guys, there’s no room to debate it. All right. I’m not talking about the short term moves here. I’m talking about what this is going to mean for prices over the next six months, which will likely lead us out of a large technical pattern that we’ve built up here for bitcoin. Now, we understand this. Right. But as much as the having might be a positive beneficial factor for Bitcoin, what’s really going to lead the inflows here, guys? That’s what we have to understand here. Right to us. The Bitcoin having might be great, but what’s going to lead people to buy Bitcoin? What’s going to lead institutional investors to really wanting to have bitcoin as a part of not only their portfolios but the portfolios of pension funds of all kinds of different funds, such as hedge funds and family funds, you know, trillions of dollars of wealth waiting to be parked into different types of asset classes. That’s going to drive Bitcoin to become a multi-trillion dollar asset. Well, that is going to be what’s happening in the sense of central banks. This is going to be the catalyst here. The sheer fact that over the last couple of weeks, really just the last two, three weeks, the Federal Reserve has added over a trillion dollars to its balance sheet, nearly 1.2 trillion dollars. And it’s continuing to expand it further all the way up to 4 trillion in the additional stimulus. Four trillion. It’s crazy, guys. I mean, this is huge stuff. We’ve now seen the U.S. Central Bank, the Fed, which had been leading the way in reducing its overall obligations or its balance sheet in this case. Now taking on more mortgage-backed securities that it had previously sold, taking on more U.S. Treasuries, taking on as much as it can, and eventually also talking about taking on buying U.S. equities directly. And the thing to think about here is not only what effect the Fed is having in doing this, but you can guess, as we talked about, that the ECB, the Bank of Japan, the People’s Bank of China, who combined played just as big of a role as the Fed are going to have on the global economy. You think they’re just going to sit here and they’re not going to, you know, for example, take upon that gap that they had with the Fed for a long time, start leaping up their balance sheets and start stimulating their markets and economies. But I’d say in that case, guys, I hate to sound snarky. You probably got another thing coming if you think they aren’t going to do that. It’s going to common evitable. He might not come this week. It’s probably going to come in the next few weeks when it starts, for example, and they start to see things getting hit bad enough there along with that as well. Go ahead and zoom in a little bit here. We’ve got the Fed funds rate, just one of many central banks, basically central bank rates that are charged on the cost of money down at a quarter of a percentage. Now, unlike the last multitude of recessions where we’ve been at a very high single-digit or double-digit interest rate, even, for example, back in 2007, we were sitting at around 5 percent. We don’t have the kind of firepower to recover as we did in the past. We only started out at about two point two five percent to around 2, 3 or 2 4 2.4 percent. We don’t have a 5 percent drop like we had last time. So what the Fed inevitably has to do is push down towards negative interest rates. And this leads us toward some major discrepancies. Right. We’ve not only seen between the three month Libro rate in the three month Treasury bill that there are some indicators here that we’re pushing into recession territory that’s already scary enough, as is. But the real thing we have to look at here is not just the implications, the implications that this means we’re likely in a recession. What it has on treasuries as an effect on their yield is just as important. And this is, again, a very big competitive negative interest rate, because, with negative interest rates, you not only have a disincentive to have your money in a bank account, because in this point, in a negative interest rate environment, you are actually paying the bank to hold your deposits. It is an obligation to have savings at this point. But even worse, in an asset where so many people have the valuation of their retirement portfolios stored in the form of U.S. treasuries, the yield is now pushing to new lows. And it’s looking like in many cases across the different types of treasuries and a different maturity dates that we are going to see negative interest rates. We have already started to see this. And many of them, if you take a look at the three-month yield, we already are pushing into negative territory. We went down, I think a negative point, 10 percent, which had never been seen in U.S. history for three-month treasury and a multitude of other treasuries as well. But I want to go ahead and really talk about the squeeze here. Right. Again, I think most of us get here why the Federal Reserve creating more dollars, in this case, is going to be supplemental for bitcoin because it’s trading against the dollar pair. Bitcoin’s value will hedge against the creation of new dollars. It will go up in time as other printing of new dollars. In this case, maybe not today or tomorrow, but eventually over time, it gets manifested in price. But this right here is really where the inflow is going to come in, and that is through the form of people hedging or getting away from treasuries, because if treasuries, which used to be seen as the world’s reserve asset, the no-risk asset, it’s used in a lot of things that the sharper ratio, a lot of economic formulas or trading and investing formulas that usually is used as an asset that says, hey, this is the risk-free rate, whatever you get on a Treasury is the guaranteed return. Right. Well, we can see here that over the last couple of years, as the Fed lowers interest rates, the Treasury yield declines as well. And as we can see here, back in the last recession when we had rates near zero percent, we also saw Treasury yields, for example, in the two years go down to zero percent. And each time we have a starker correction, each and every time a 60 percent decline in the yield, an 84 percent decline in yield and ninety-seven pushing towards a 98 percent decline of yield. And now we’ve already gone through a ninety-one percent decline. But if we do anything close to what we did back in 2008, we’re going into negative territory very soon after. What happens when we go into negative rates? What happens when the world’s reserve asset is now penalizing you for owning it? Sure. Maybe the spot price of the assets might be going up a little bit. No doubt about it. That’s what we’ve seen. We tend to see the bond prices go up when yields go down. But we know it can’t last forever. What happens when those bond prices start selling off and the yields are still negative? There is going to be a huge drive for a hedge that, yes, doesn’t provide a yield, but at least hedges against the overall macro environment of inflation. The printing of new money, new quantitative easing. But along with that, doesn’t penalize you for owning. Well, there’s really three assets in the world that I know that do that. They don’t just print themselves at thin air. They have at least a limitation or a fixed monetary policy. And along with that as well, don’t penalize you for holding them. And that is gold, silver. And Bitcoin. Plain and simple, again, the things are these are very key principles to keep in mind, guys. I know they seem oversimplified maybe to some or maybe they seem a little bit too complex or maybe they just may seem boring to some people because it’s not a new trendy altcoin or it’s not that the biggest news that’s being talked about in the crypto space. But these are what’s going to cause trillions of dollars of inflows in the cryptocurrency space. You want Bitcoin’s price to go up. Bitcoin’s price is only going to go up if there are new inflows from other markets. Plain and simple. There are buyers. Bitcoin won’t fall off the face of the Earth within a week. The order book could be cleared. So we need to really think here, we can’t talk about, you know, what one hedge fund coming in and buying 50 million dollars a bitcoin. And I know it’s huge news. And that’s not huge news. Huge news would be that there is a mass outflow of treasuries and they’re going into hedging assets like gold, like silver and bitcoin. Because in that case, you’re talking about trillions of dollars when you’re talking about people exiting out of equity markets. We’re talking trillions of dollars when we’re talking about people looking for hedges. Right. They’re looking for things that can deliver on those two promises. Bitcoin does that just as well. In fact, it does it better because it provides a finite supply. Not in this having cycle, but in the next four years, having a cycle, we are going to have a better stock to flow ratio than gold, interestingly enough. And a fair value basis. This will push us from not only where we’re expecting to go this time around 90 to 100 thousand. It will push us up to a potential valuation of a million dollars. I know that sounds crazy to see that in twenty twenty-five or to see something like that later down the line here in twenty twenty-six. Twenty twenty-seven. It really isn’t that far fetched if the Fed keeps printing like this, the sheer amount of need for dollars right now and the economy cannot be understated. And when those dollars get printed into oblivion, much like every currency, not just dollars, euros, Japanese yen, Chinese yuan, whatever it is, when those get printed into oblivion, you’re going to see it reflect at a minimal and bitcoin‘s price. Because at the end of the day, if we devalue the purchasing power of the dollar in half, you’re likely going to see Bitcoin’s price give or take roughly double. Not to mention Bitcoin is an asset has generally been setting higher lows and higher highs. Overall, I think it’s been due to not only more users in the ecosystem. What people knowing about it, more people buying bitcoin, but also understanding that its monetary policy is fixed for the last 10 years. Unlike the Fed, which says we are going to do X and they do Y. Bitcoin has been chugging along. If you need to process a transaction, you can do it. If you want to know that your money is going to be fixed in a system or you’re purchasing power is fixed into a system that isn’t going to change the rules every five minutes. Bitcoin does that. Right. And there’s the mean. It’s like bitcoin fixes this. Bitcoin is a fix everything in the world, but it fixes to very key things. And this goes with a lot of other cryptocurrencies as well. I would say a theorem as well would fit into this. Can’t possibly like coin as an alternative as well. But Bitcoin is the clear winner here, no doubt about it. At the end of the day, bitcoin has been time-tested more than any other cryptocurrency asset. It is the most valued cryptocurrency asset in its monetary policy is the most beautiful out of any system that I’ve seen. So anyway, I hope you guys have enjoyed this video. If he did drop a like I always appreciate, you know, getting to hear from you guys. And I’ll also leave a comment if you have something to say. But above all, guys, these are the videos that I like. I like focusing on the longer-term picture. Notice what we’re looking at. Here’s the weekly chart. We’re not looking at the short term charts. We’re waiting for a potential break out here with the having event that’s going to spark the initial rally. And then afterwards, we need those inflows to carry this market even higher. Those outflows of other traditional markets into a new emerging asset class of cryptocurrencies. All right. Anyways, I hope you are having a fantastic day wherever you are. And I’ll see you all in the next video. Stay tuned.