Marc Friedrich is a financial expert, multiple bestselling author, sought-after speaker, thought leader and free spirit.
His latest book, „The Biggest Crash of All Time,“ is SPIEGEL’s number one bestseller, „The Biggest Crash of All Time.“ Many of his forecasts have come true. With his fee-based consultancy Friedrich Vermögenssicherung GmbH, he advises private individuals and companies on Bitcoin Trader and other cryptocurrencies.
„I expect a new all-time high before Christmas and new highs in 2021 – prices in six figures by the end of 2022!“
So I had finished this article in early December and then left it for various reasons. Now my forecast has actually been exceeded. Why the Bitcoin has risen so strongly and why we will soon see new highs, you will learn in the following lines.
Inflation is coming – central banks must keep printing
Since the near-death experience of the monetary and financial system in 2008, we have been in a state of financial emergency. Triggered by greed, speculation and hubris, central banks have enforced unprecedented, historic measures worldwide. Interest rates have been cut to record levels, and in some cases are already in negative territory. At the same time, the money floodgates were opened and the markets were permanently supplied with cheap liquidity. A veritable tsunami of money, leading to ever larger asset bubbles, for example in real estate or stocks. Almost 18 trillion U.S. dollars of all government bonds currently have negative interest rates, as a chart from Bloomberg shows.
Bloomberg chart on the total volume of all government bonds worldwide.
Central banks around the world are in a precarious position: the U.S. Federal Reserve, for example. It now has a staggering $7.2 trillion on its books. That corresponds to 36 percent of the GDP of the world’s largest economy. The European colleagues at the central bank in Frankfurt are also in no way inferior to the USA. Here, too, the chart rises parabolically. The ECB already has 6.83 trillion euros, or 68% of the eurozone’s GDP, on its books.
At the same time, public debt around the world is soaring to new heights. 277 trillion US dollars is the total debt worldwide. That is 350 percent of the world’s GDP. The U.S. alone is $27.3 trillion in the red, 128 percent of its own GDP.
For these reasons, central banks can no longer raise interest rates in the existing monetary system, otherwise bankrupt countries would go bankrupt, businesses would fold, economies would be stalled, investment bubbles would burst, and unemployment rates and debt would explode. For this reason, the destructive downward spiral of interest rate cuts and money printing will have to continue. Until the bitter and very expensive end. Because the collateral damage is becoming more and more devastating and expensive. Not only monetarily but also politically, economically and socially.
Against this rampant debt-making and money printing without interest and reason, investors and savers need values limited by nature or by mathematics to protect their purchasing power. One of these is Bitcoin.
Big money comes and discovers Bitcoin
The technology company „MicroStrategy“, listed on the US stock exchange Nasdaq, announced that they had invested a proud $250 million of their $500 million cash reserve in Bitcoin. The rationale was: as a hedge against inflation and a store of value against the constant printing of money by central banks. Just one month later, they went one better by putting another 175 million dollars into Bitcoin. Average price 11,111 dollars. Most recently, they even invested another $50 million in Bitcoin at a price of $19,400. As a last coup, 0.75 percent corporate bonds were collected for 400 million dollars. The financial company plans to reinvest these entirely in Bitcoin. MicroStrategy’s stock is thus the best and cheapest ETF on Bitcoin.
Another example is provided by „Square“. Twitter founder Jack Dorsey’s FinTech company invested $50 million in Bitcoin. U.S. insurer MassMutual’s recently announced $100 million investment in Bitcoin is contributing to the cryptocurrency’s mass adoption, as is PayPal’s announcement that it will be able to trade and pay for Bitcoin via its payment platform.
Even more weighty are the opinions of various hedge fund legends such as Paul Tudor Jones, Bill Miller and Stanley Druckenmiller, who have recently spoken positively about Bitcoin, and this after years of railing against it. The CIO of BlackRock also joined in.
Many former arch-enemies of the digital currency have jumped on the Bitcoin bandwagon and have since been positive. This is probably also due to pressure from customers, after Bitcoin returned to the market this year with a performance of over 200 percent.