London School of Economics (LSE) research associate Dr Garrick Hilemanbelieves that central banks stockpiling Bitcoin could result in the coin rising in value.Given the low of volatility in Bitcoin prices currently, as seen below, and the fact that Bitcoin finally seems to be consolidating above $4,000, are we about to see the much-heralded next leg up in Bitcoin prices?
Source :https://bitvol.info
There has been much talk of the next global recession being imminent. Which may explain why the Russians, amongst others, are stockpiling gold thus resulting inJanuary 2019 seeing the net biggest monthly accumulation of gold for central banks since January 2002.
Further evidence of a potential recession has been the yield curve in theUS inverting i.e. short term interest rates are now higher than long term rates - historically a predictor of recessions. Another indicator followed by many is the Shiller ratio, which seems to be showing that S&P 500 stocks are not cheap:
So where do central banks invest? Could Crypto Currencies like Bitcoin be seen as a hedge - an alternative asset for them to hold ahead of the next economic downturn?
Interestingly over the last four years, Bitcoin continues to have a better Sharpe ratio (adjusted return) than many other assets. A fact that will not have been lost on many!
As a sign that Bitcoin’s fortunes are beginning to improve, OKeX, a Maltese Digital Asset exchange, recently reported that it had turned over$2.4 Billion in a day and over 56% of its traders are now long of Bitcoin!
If Central banks start accumulating Bitcoin and we see a rise in its price this will significantly help many of the 5,200+ Digital Assets which have been issued, as many of them were funded by investors using Bitcoin.
Therefore, a rise in the value of Bitcoin ought to inflate the price of many other Digital Assets and help improve their balance sheets...
