Will Millennials Put Their $37 Trillion Inheritance in Bitcoin?
In a decade of monumental shifts, more people than ever see the fabric of society as a house of cards, ready to topple down. As parallels with the Weimar Germany become more acute, will Millennials have enough time to increase their wealth?
Is Hyperinflation a Legitimate Scenario?
It is no secret that perception and psychology play a powerful role in the markets. This is further exacerbated within an economy that is debt-based, counting on the perpetual growth that has been severely crippled thanks to COVID-19 and its prolonged, intermittent lockdowns. In turn, all the ingredients are there for hyperinflation to unroll in the not-so-distant future.
Furthermore, there is so much expectation of (hyper)inflation that this itself begins to be priced into the stock market. For the past year, we have seen a record growth of blue-chip stocks, even surpassing Bitcoin. While these stocks gained in value, the real world is losing value.
Through 2020 and 2021, a huge amount of wealth has been siphoned away, draining human capital with it. In that sense, the clear disparity between the stock market and the world around us can be viewed as a bubble. One that is holding fictitious value ready to flatten, just as the “flattening of the curve” instigated the current state of affairs.
One important thing to keep in mind is that an economic crash occurs much later after the initial wave of inflation hits. Therefore, stock prices, along with wages, may rise significantly still, but not sufficiently to eventually outpace the prices in the case of hyperinflation. Michael Burry of Big Short fame, placed this gestation timeline within a short distance from now, in his epic inflation thread.
Is Bitcoin ‘The’ Asset to Have During Inflation?
If or when hyperinflation occurs, it has happened many times before. This makes it easier to figure out which assets to hold. According to the Bank of America, the closer an asset is to be described as opposite to fictitious – real assets – the more it is resilient to devaluation.
As you can see, precious metals are at the top of the chart. Bitcoin was specifically designed to mimic gold’s properties, which is why its rise in price has been predicted relatively accurately by the S/F model, based on its rarity and mining rate.
To the chagrin of Bill Gates, this means that Bitcoin, for the first time in monetary history, presents itself as an easy way for anyone with internet access to safeguard their wealth from devaluation. Michael Saylor of MicroStrategy, which has already invested about $3.6 billion into Bitcoin, estimated that one billion people will hold this digital gold in their smartphone wallets by 2026.
Just today, during CNBC’s Squawk Box, Taylor emphasized Bitcoin as an “egalitarian progressive technology”. He is definitely not shy in explicating Bitcoin’s stellar long-term prospect:
“Bitcoin is going to flip gold and it’s going to subsume the entire gold market cap. Then, it’s going to subsume negative-yielding sovereign debt and other monetary indexes until it grows to $100 trillion dollars…Once it gets to $10 trillion, its volatility will be dramatically less.”
Generational Shift as a Mighty Bitcoin Booster
One of the empirical sources for Saylor’s unbridled Bitcoin optimism comes from Deloitte data. This report points to an upcoming decade in which Millennials are poised to inherit $37 trillion worth of assets from their parents. Even before the pandemic-driven lockdowns decimated employment and businesses, 40% of Millennials were eager to commit to cryptocurrencies during a recession.
This Millennial tendency to save money and adopt novel blockchain-powered digital assets has only gained more prominence since, with Bitcoin becoming their gold. Moreover, as the Robinhood – Citadel scandal revolving around GME stock trading demonstrated, the underlying rigging of the financial system appears to be unavoidable in anything but decentralized finance.
The likely hyperinflation ahead may prove to be the biggest one in our monetary history, given the scale of staked liabilities. However, with such a unique asset in hand as Bitcoin, those who had the foresight to invest in it may exit this turbulence with minimal scarring.
Outside of Bitcoin and Ethereum, which represent the pillars of Decentralized Finance, which major cryptocurrencies do you still hold? Let us know in the comments below.