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The global economy and Bitcoin (BTC) have both been incurring increasing volatility as of late, with the former’s volatility primarily being centered around recently released data from both the United States and Europe, which signals that the economy may currently be at a precarious point that requires a significant amount of monetary stimulus to be supported.
Despite this, one analyst believes that all this data may actually provide “rocket fuel” for Bitcoin as the “Gold 2.0” narrative continues to strengthen due to its uncorrelated nature.
Bitcoin Faces Downwards Pressure, But The Global Economy Does Too
At the time of writing, Bitcoin is trading down over 2% at its current price of $9,790 and is down significantly from its daily highs of over $10,000.
Bitcoin’s bearish price action as of late was first sparked this past weekend, when it sharply surged to $11,000 before incurring a sudden influx of selling pressure that sent its price reeling down.
This week, the global economy has also been introduced to some bearish pressure that came about after a more-hawkish than anticipated ECB report that signals a rate cut is likely on its way. Although the markets have responded positively to this, it does signal that the economy require stimulus to maintain its steam and is not self-sufficient.
Furthermore, US GDP growth has also been facing some pressure, dropping from 3.1% last quarter to 2.1% this quarter.
Pomp, the co-founder and partner at Morgan Creek Digital, spoke about this in a recent tweet, saying that this slowdown is rocket fuel for Bitcoin.
“HERE WE GO: US GDP last quarter: 3.1%. US GDP this quarter: 2.1%. Economy s l o w i n g down only means one thing — cutting rates and printing money! They don’t realize that they’re giving Bitcoin the rocket fuel it was built to consume,” he explained.
HERE WE GO.
US GDP last quarter: 3.1%
US GDP this quarter: 2.1%Economy s l o w i n g down only means one thing — cutting rates and printing money!
They don't realize that they're giving Bitcoin the rocket fuel it was built to consume.
Long Bitcoin, Short the Bankers!
— Pomp 🌪 (@APompliano) July 26, 2019
ECB Rate Cuts and Inflation Could Bolster BTC
In addition to the US economy slowing down and the likely cut in interest rates by the ECB that is needed to sustain the European economy, Pomp also noted that the influx of money that the ECB is going to print in order to “stimulate” the economy will also bolster BTC.
“ROCKET FUEL: They’re going to cut rates and print money right as we march towards the Bitcoin halving. Buckle up. This will be wild,” he bullishly noted in a tweet.
ROCKET FUEL: They’re going to cut rates and print money right as we march towards the Bitcoin halving.
Buckle up. This will be wild 🚀 pic.twitter.com/QotDXKTJRj
— Pomp 🌪 (@APompliano) July 25, 2019
As the global economy continues moving towards what many analysts believe is an imminent recession, it is highly likely that Bitcoin’s possible status as a safe haven asset will either be validated or invalidated.
Featured image from Shutterstock.
