China’s recent currency devaluation seems in line with similar policies taking place across the globe. Let’s take a look why Bitcoin price is rising as a result and why investors are increasingly considering taking shelter in Bitcoin — a neutral and borderless network for storing and transferring value — alongside traditional safe haven assets.
As the U.S. and other countries attempt to bolster economic growth through rate cuts, investors are beginning to flock to gold, cash, government bonds and increasingly Bitcoin as a hedge, according to economist, Raoul Pal. In a Twitter thread, the former Goldman Sachs executive makes the case for why the world is fast approaching a currency crisis. Pal also believes Bitcoin will thrive throughout the impending monetary carnage. He warns that: “We are at the most important juncture in FX markets in my entire 30 year career. The dollar appears at risk of an uncontrolled rise.” Pal points out that the Fed Broad Trade Weighted Dollar Index is literally on the verge of breaking above a massive cup and handle pattern at 130. Meanwhile, the ADXY (Asia Dollar) index is about to fall below a crucial trendline. Pal says a fall of 20% or more across ALL Asian major currencies has brought the index face to face with what he calls the “cliff of death.” At least seven other fiat currencies are also dropping in value, Pal notes, concluding that a strengthening dollar is catalyzing a massive global deflationary wave, which could lead to a financial crisis. The silver lining, however, is that this could be very bullish for Bitcoin price. It’s believed that Bitcoin offer three key reasons why it’s to be considered a safe haven asset to hold.
1. Fiat currency continues to be manipulated by their overseers. 2. Bitcoin increasingly non-correlated with traditional markets 3. Bitcoin can provide asymmetric returns