Bitcoin will rise to one million dollars. You may find this hard to believe, but please be patient and read my analysis below.
Many people are puzzled as to how a decentralized virtual currency with no physical backing can be worth so much. This is mainly because most people's understanding of Bitcoin is limited to its 'currency value'.
Given the scarcity of Bitcoin, some people believe it will become hard currency like gold, which is why Bitcoin is referred to as 'soft gold'. These people think that Bitcoin can replace the US dollar and hedge against its depreciation, which is not entirely correct. The value of Bitcoin is not meant to replace the dollar but to work alongside it.
Currently, US debt has reached 35 trillion dollars, exceeding the annual GDP of the United States, and is expected to rise further. The growth rate of debt surpasses that of GDP. Through conventional means, the US cannot repay its snowballing debt. What to do about such high debt? If not repaid, it will lead to default, causing the dollar's credit to disappear. However, this circular dollar debt must be repaid. How? Only through massive money printing. Everyone knows that printing money will lead to a significant depreciation of the dollar, losing its status as the world's number one currency. In the early days, the dollar was pegged to gold, but gradually, too much dollar was printed, making it unsustainable. It was then pegged to the emerging liquid gold, oil, but with the rise of new energy, the importance of oil has gradually diminished. So how does the excess dollar get diluted? That's right, Bitcoin shines at this moment. Compared to scarce physical goods, decentralized virtual currency serves as a better reservoir for dollars. Virtual currency is a naturally isolated group, and its price increase does not lead to significant physical inflation. Therefore, the scarcity of virtual goods has become a more perfect new reservoir for US dollar debt and excess currency. As US dollar debt continues to increase, the excess dollars will largely transfer to the appreciation of Bitcoin, pushing up its price. This is also the basic logic behind major US capital increasing their holdings of Bitcoin, which will also encourage some enterprises and other countries to hold it. With rising US dollar debt and excessive dollar issuance, Bitcoin appreciates, making the held Bitcoin an asset.
Some people say that virtual currencies are decentralized, with good security and privacy. However, don't forget that the circulation of virtual currencies requires virtual currency exchanges. The government cannot regulate virtual currencies, but it can regulate exchanges. Indirectly, virtual currencies can still be subject to human regulation, which does not achieve true decentralization.
Once the virtual currency pool accumulates funds from around the world, and non-US institutions or countries dominate virtual currency holdings, American institutions in this pool may band together and run away. The 'water' in the pool will be transferred to other holders, leading to a plummet in currency value, and Bitcoin will become a liability. The massive 'water' in the pool will vanish into thin air, and the dollar will perfect its debt. Even without other institutions taking over, US dollar debt will continuously flow into this pool, gradually increasing and pushing up the price of Bitcoin, without impacting the US real economy. In summary, #Bitcoin# is a perfect tool for the US to monetize its debt.