In the midst of a global economic downturn, Bitcoin appears to be gaining momentum against the trust currencies that have been most affected by the VOC-19 pandemic.
The fact that Bitcoin is considered „solid money“ is a common refrain among many advocates of the popular Kryptomoney. With a finite supply of 21 million and a network secured by over 120 exahashes per second of computing power, the consensus among industry commentators has often tilted toward it becoming a global monetary superpower.
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Barely a decade into its existence, Bitcoin’s inferred value is already the eleventh largest monetary base in the world. In early November, Bitcoin became larger than the Russian rouble for the first time in history.
As fiat currencies weaken under economic pressure exacerbated by the coronavirus pandemic, Bitcoin (BTC) has continued its upward trajectory through most of this 2020. Although price fluctuations are much more volatile, Bitcoin has risen about 120% so far this year despite what happened on Black Thursday, a substantial drop that occurred in mid-March.
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With economic recovery plans possibly involving several stimulus packages, such cash injections are expected to cause significant devaluation in trust currency values. If Bitcoin follows the progress predicted by numerous market analysts, it’s poised to rise even higher on the record of the global monetary base.
The complete record of the history of the world’s reserve currency remains consistent with the fact that monetary bases go up and down. In the six monetary eras since 1450, no single currency has maintained global dominance for more than 110 years. With the 95-year-old US dollar remaining the world’s reserve currency, some hope this is a sign that things may soon change.
Fiduciary Currencies Weakening
Despite being the most gold-backed fiat currency in the global market, the Russian rouble now has a lower monetary base than Bitcoin. With the ruble losing more ground to the US dollar and BTC jumping to the USD 16,000 mark, 1 BTC now equals 1.2 million rubles. The next step for Bitcoin is to overtake the Canadian dollar. Based on its current current supply, a move of BTC above USD 18,000 would see it overtake the Canadian dollar.
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As previously reported, Bitcoin has already reached historic highs against seven national currencies, including those of Brazil, Argentina and Turkey. Rising inflation, accentuated by economic stagnation in the wake of COVID-19, has negatively impacted several trust currencies.
For now, Bitcoin’s historical maximum remains at USD 19,665 reached during the December 2017 bull run. However, for Bitcoin to begin challenging the world’s major currencies such as the U.S. dollar, the Chinese yuan and the Japanese yen, it will have to reach a six-figure price, according to John Todaro, head of research for the institutional trading platform TradeBlock, who told Cointelegraph:
„We might see Bitcoin outperform other major fiat currencies, but it depends on how you measure the size of a foreign exchange market. The New Zealand dollar (‚kiwi‘) is at the bottom end of the group and is the most susceptible to being overtaken by Bitcoin, but currently sees over $100 billion in daily trading volume, which is well above Bitcoin’s. Unlike other solid money assets, Bitcoin has a high trading volume, so even with a modestly higher market capitalization, Bitcoin’s notional trading volume could be much higher than it is today.
Bitcoin Shines as Global Economy Tumbles
The parabolic movement required to push Bitcoin to such levels would also place it firmly in the same category as gold, as a consolidated reserve of value. Several advocates of the popular krypton currency already identify BTC as an adequate hedge against currency devaluation and other forms of economic uncertainty.