Rest assured, the trajectory for cryptocurrencies looks promising as we head into 2026 and beyond!
Sadly, the looming economic pressures might push cryptocurrencies lower in the first half of 2025, potentially keeping Bitcoin's price stagnant as the market adjusts to negative forecasts.
Both Bitcoin and gold serve as alternatives to traditional currencies and have reached record highs in dollar terms recently. A closer examination of both, however, reveals some concerning patterns.
The turbulence recently seen in equity markets sheds light on broader liquidity challenges. Despite former US President Trump's sweeping reforms, economic fundamentals are hinting at lower valuations for riskier assets in the medium term.
The market boost seen in the last quarter of 2024, often referred to as the 'Trump Surge,' has concluded, and the consequences are becoming apparent.
Trump Is A Big Win For Cryptos
The burst of crypto enthusiasm observed in November 2024 was justifiable, especially with President Trump's policies benefiting the sector, as highlighted by the surge in XRP.
The broader issue lies with altcoins, as minor tokens have seen a sell-off despite an end-of-year surge, including the weakening of DOGE. Elon Musk has now ascended to unprecedented influence in the US, yet DOGE as a cryptocurrency seems inactive.
We perceive significant issues lurking in the global economy. While the situation might appear stable on the surface, it's lacking the optimism and liquidity essential for a shift towards higher valuation levels.
When the next upward surge occurs, rendering sub-million-dollar Bitcoin a relic of history, it will likely transpire in a vastly different economic setting. At that future point, broader crypto exposure among people will possibly be the standard.
Central Banks Aren’t Headed To 0%
Central banks, especially the Federal Reserve, are not rushing to slash interest rates to zero as they did in 2008-09. Their focus remains firm owing to inflation concerns, thus, maintaining current rates.
The latest robust CPI figures from the US support this perspective further. Rates aren’t going much lower Meanwhile, as the global economy falters, it exacerbates challenges for the majority, while the wealthiest enjoy unfathomable growth.
Both former President Trump and the Federal Reserve seem aware that a crisis might precede a reduction in interest rates and a return to quantitative easing. A worldwide financial crisis appears imminent.
The overnight interest rate in the US still falls considerably short of the actual inflation rate, dismissing the official numbers as misleading. Given such disparities, a surge in inflation in coming years seems inevitable.
With an increasing influx of dollars into assets like Bitcoin, we anticipate a dramatic rally, although timing remains unpredictable.
The Federal Reserve recognizes that with trillions of dollars in fresh issuance and refinancing slated for 2025, supportive measures will be essential.
This scenario spells potential for cryptocurrency price appreciation in the medium term, though it might also trigger a downturn as a global crisis develops, paving the way for financial policy adjustments.
Strange Bedfellows
Over the past six months, assets like the USD, Bitcoin, and gold have performed well.
In the immediate future, however, the continuation of this trend seems tenuous. A robust US dollar complicates major bond sales and poses image concerns for the new administration, characterized by vanity.
The solution appears to lie with the US dollar.
While a stronger dollar might hinder bond sales in stable markets, if global investors are concerned about capital returns, US debt could attract significant interest, as it did in 2008 during a financial upheaval.
Bitcoin's absence in 2008 left gold as a primary refuge, though it, too, saw significant losses, unlike US Treasury bonds and the dollar. However, gold's impressive resurgence into new all-time highs has persisted.
Currently, cryptocurrencies are thriving and may be approaching a unique investment window. Gold also holds promise, though cryptos might outpace other asset classes over the medium term.
The economic vitality of the USA and EU appears exhausted, while China's outlook seems bleak from the start.
The Trump presidency fails to tackle deep-seated structural issues that have evolved over time. The global economy suffers from centralized models that erode value, exemplified by the USA and the EU.
Today's economic systems privatize gains and socialize losses, highlighting flaws in current political structures.
While Asia once represented economic optimism, many East Asian countries engage in corruption, central planning, and flawed strategies leading to demographic challenges, compounded by unmanageable national debts.
In essence, the global economy is deeply flawed, lacking prospects for organic growth, which necessitates higher volumes of government debt entering the market.
The modern monetary system operates on large-scale delusion, akin to central planning, with no feasible reform in sight. The 2008 financial crisis was merely a precursor for a more severe crisis expected in the ensuing years.
Emerging Horizons for Cryptocurrency Investment
Within volatile markets, crypto reigns supreme as the optimal high-risk asset, primed for acquisition during downturns.
The 2024 fourth-quarter market surge, dubbed the 'Trump Pump,' demonstrated swift market movements, though few tokens currently surpass their pre-surge levels. This serves as a cautionary indicator amid strained market conditions.
Future crypto prices may appear remarkably favorable in retrospect. However, given prevalent speculative optimism towards risk assets, caution is warranted approaching mid-2025.
While acquiring Bitcoin at $96,000 is enticing, obtaining it at $45,000 would be significantly more advantageous, a possibility within the next 18 months, if not sooner.
