This Is the First Bear Stock Market Since Bitcoin Was Created, Likewise the Conditions That Led to the Creation of Bitcoin Have Returned

March 13, 2020 / by Zachary Mashiach

Bitcoin (BTC) was created during the depths of the 2008 Great Recession. Indeed, the domain name was purchased on August 18 2008, the Bitcoin (BTC) Whitepaper was released on October 31 2008, and Bitcoin (BTC) launched on January 3 2009. It seems the Great Recession, and the trillions of dollars of economic bailouts from Central Banks, were the factors which motivated Satoshi Nakamoto to create Bitcoin (BTC). Now, for the first time since Bitcoin (BTC) was created the world is back in a bear market, and financial conditions are very similar to the conditions that inspired Satoshi to create Bitcoin (BTC), as will be explained in this article.

Essentially, Satoshi saw how Central Banks could print trillions of dollars at will, and how this causes a devaluation of fiat currency. Basically, Central Banks printed as much money as it took to save corporations and banks, at the expense of everyone else who was holding fiat, since fiat declined in value in response to the trillions of dollars of money printed out of thin air.

The point of Bitcoin (BTC) is that it has a fixed supply, which is capped at 21 million coins, and Bitcoin (BTC) cannot be printed at will since it is decentralized. In other words, Satoshi created Bitcoin (BTC) so the world would have a currency that could not be devalued by Central Bank money printing.

Since the creation of Bitcoin (BTC) there has been trillions of dollars of Central Bank money printing, and the USD has correspondingly undergone 23% inflation according to Consumer Price Index (CPI) data.

However, this amounts to only about 2% inflation per year, and simultaneously the stock market has been in a continuous bull market for the 11 years since Bitcoin (BTC) was created, making Bitcoin (BTC) more of a sideshow rather than a necessity.

That being said, in 2020 the global economy has been under increasing pressure due to the Coronavirus, and finally the economy has cracked this past month. In just one month the United States stock market has gone from record highs to down over 20%, putting it in a bear market.

The Dow Jones Industrial Average (DJIA) has regularly been losing 1,000-2,000 points in a day, and roughly 3 years of stock market gains have been wiped out. Somewhere over $10 trillion has been wiped out from global markets, although it is difficult to estimate.

Just like during the Great Recession, Central Banks worldwide are responding by printing hundreds of billions of dollars. One example is that the Federal Reserve is offering $3 trillion of liquidity for Treasury Financing Markets this month, and it appears this is only the beginning of the United States’ attempts to print and inject money into the economy, since it appears it will take much more extreme measures than that to stop the stock crash.

Therefore, the conditions which inspired Satoshi to create Bitcoin (BTC) have returned, and it is quite possible that many trillions of dollars will be printed in the coming year to salvage the economy, which will likely weaken fiat currency in the medium to long term.

Thus, Bitcoin’s (BTC) true test has come. Only time will tell if Bitcoin (BTC) will fulfill its original mission of being a currency that will hold or gain value as fiat currencies weaken worldwide.


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