The 2020 Economic Crisis and the Beginning of the Second Bitcoin Age

The 2020 Economic Crisis and the Beginning of the Second Bitcoin Age

Minexpert, which I love to follow on Twitter (NEW @madenuzm) I would like to share with you the article titled “2020 Economic Crisis and the Beginning of the Second Bitcoin Age” that he shared on his Medium account.

It is not known that the numbers that follow each other are unlucky, it is already certain that the year 2020 we are in will be a year not only in this year, but also in the next hundred years. However, under this year, which seems to be completely bad, there are very important features that do not appear and can shape our future. In this article, we will reveal these features, which are not very visible in us, and the meaning of the Global Economic crisis triggered by the coronavirus, which means for the Bitcoin and crypto money ecosystem. In addition, we will talk about the features of the Old and New Economic System in order to better understand the issues.

Old Economy System

In the early periods of states, currencies were tied to limited indices (gold, silver). This meant that the more a country prints its own money, the value of all the money it possesses, the more limited assets it has, the more it will be worth it. Thanks to this basic feature of the Old Economy System;

  • It was fair
  • It was far from manipulation
  • Real effort to earn money

New Economy System

Although the Old Economic System had a fair structure, the validity of this system disappeared for a very long time, and state currencies slowly began to eliminate their commitment to limited value indices. In the next step after this commitment began to disappear, new money features such as unlimited money printing, interest and credit emerged as the basis of the New Economy system.

These features of the New Economy System;

  • Started to eliminate justice
  • Increased manipulation
  • Eliminates the need for real labor to make money
  • Losses of the New Economic System

Along with the new Economic System, besides the basic losses above, additional derivative losses occurred to them.

The first is inflation. The money, which was printed unlimited, caused the money to constantly decrease its value against other values ​​that it could buy. Even from time to time, these declines were so severe that, in addition to inflation, it started to enter the concept of hyper inflation, which means more essential. Regardless of this painful situation, good economy and bad economy, they started to live in every country. However, in some, for example, in countries such as Venezuela whose economy has deteriorated very much, the terrible aspect of this situation has become more apparent. So much so that, due to the hyper inflation in Venezuela, you can buy only one toilet paper with million money.

The second major drawback of the New Economic System is that the income gap between the rich and the poor becomes a gap. The reason of this; This is due to the fact that people who have reached a certain wealth can expand their business and earn more money with the loans in the New Economy System. In addition, it arises from the fact that the rich sector can obtain passive income continuously with interest on the money they have. When we look at low-income people, we can see that they can not get credits or passive income with interest in the face of strong economic domination of the rich. That is why, while the rich continue to prosper constantly, they remain in the low incomes and lower income in the face of the rich.

Result

We have seen some of the main damages of the New Economic System. With the researches, these damages have been scientifically revealed. The first of these studies showed that the total amount of money held by 1 percent of the world population is equal to the amount of money held by 99 percent of the world population. Another study found that over half of US citizens had less than $ 10,000 in their bank account. If we add one more research result, it was revealed that 23 percent of the world population, that is 1.3 billion people, is in poor status.

History of the New Economic System

After learning the basic features of the Old and New Economy System and the damages of the New Economy System, let’s examine how the New Economy System emerged.

In history, this system was discovered by the United States in 1971. This year, the United States announced in an international declaration that the US dollar would be printed regardless of the gold index. This situation spread to all countries individually with the domino stone effect shortly after creating a shock effect all over the world. Because no country wanted to have a limited amount of money against unlimited money.

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Undoubtedly the United States was the country that had the best interest in this situation. Because unlimited dollars, which are printed without any limited value, were distributed to every part of the world in a short time, and led to the establishment of dollar domination in the world. This situation shows us why the US dollar is dominant in the markets today.

After a while after the USA switched to unlimited printed monetary policy, it was the first country to implement systems such as interest and credit. These two methods have become an exit door for the USA, because unlimited money must be distributed to people in a certain way.

2008 Economic Crisis

The losses caused by the New Economy System started to come to a significant level when we came to the 2000s. However, despite this, the USA still continued to announce new loan and interest methods one by one, without giving up this monetary policy. The most painful example of these is that they give credit to people with low income under the name of mortgage loan. Although the purpose of this loan was shown as a pink fairy tale with the promise of low-income people getting home, in fact, behind this loan lay a strategy of the US banks to make money. Because, until that time, they were aiming to make money from low-income people besides the money earned through credits given to rich people constantly. For this reason, a plan was created and loans were started to be given to low-income people.

Process

During the planning phase of the mortgage loan, the problems that could be encountered were listed. The biggest problem on this list seemed to be that low-income people couldn’t pay the loan. For the solution of this problem, the items that were seized by the bank were added to the loan agreements if the loan owner could not pay the loan. Thus, if the bank loan was not paid, it could sell the house to be bought by law and compensate for the loan money.

In low-income people, they started getting loans even if they couldn’t pay off the loans because they didn’t have much assets already, with the thought that there was nothing we could lose. After the loans began to be borrowed, sales on homes in the US began to accelerate. In this case, it gradually increased the house prices. However, the rise in house prices was still not able to slow down those who had credit. Because the mass acting with the logic that we have nothing to lose, even if the house prices increased, they continued to attract loans and buy houses again. While the process continued in this way, at first everything seemed positive for everyone. Because low-income people were getting home, banks were making money, the real estate market was making money, and they were happy with the increase in house prices. But while this pink fairy tale continues like this, after a very short time, a big problem would arise.

The Emergence of the Problem and the Beginning of the Crisis

When credit payment dates came, low-income people began to have difficulty paying loans. After a while, they became unable to pay well. Because the amount of the loan they took was more than the amount they could pay.

As this began to happen, banks began to sue lenders and started buying homes for low-income people. The pink fairy tale created by the US banks was thus heading towards a bad end. However, this tale would end badly not only for low-income people but also for banks. Because when the banks started selling the houses they bought in the case results, they saw that the houses were not bought by anyone. The reason for this is that if there was no mortgage loan, the real estate market would not be so swollen, that is, so many houses would not be sold and house prices would not increase so much. For this reason, many of the houses they put up for sale caused banks to remain in their hands.

All of this led to the end of the pink tale, which came out with a loan, with a bad result on both sides, and there was a serious Economic Crisis on the USA. After this situation started in the USA, it was not limited to the USA, and again, with the domino effect, it affected all markets one by one and caused a Global Economic Crisis.

The Solution of the Crisis

Just as they say, it is worse than the habitual vagabond, after the 2008 crisis, he tried to relieve the markets and eliminate the crisis by not changing the US policy, printing and distributing higher amounts of money. Although this will not create a permanent solution, it has enabled us to alleviate the impact of the crisis until 2020, with a balloon growing further in the background. The name of this Balloon: “Unlimited Printed High Amount of Money“I y.

2020 Economic Crisis

During the 2008–2020 period, the balloon in the background continued to grow steadily. Because not only the USA but the central banks of other countries were trying to eliminate the problems by printing unlimited money in the face of the smallest economic problem. In addition, banks were given the right to distribute 9 times the money they hold as loans in order to further relax the markets. Not 2, not 3, but 9 times!

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Because of this, the balloon has continued to swell to the present day by constantly growing larger and has started to occur due to the coronavirus that appeared in 2020.

2020 Economic Crisis Process

Warning: First of all, we have to say directly that the main reason for the crisis we are experiencing this year is not the coronavirus. Because in the process until today, unlimited money, the right of banks to distribute 9 times their existing money was the basis for the collapse of the current economic system. For this reason, many economists had predicted this crisis years ago. Likewise, we have mentioned in another article, one year before the crisis, that there may be a global crisis in 2020 or 2021.

The beginning of the process took place when large companies, whose business began to shrink due to their coronavirus, began to withdraw their money. When these companies wanted to get their money in cash for the economic bottleneck they could enter due to the virus, the problems started to come to the fore. Because banks were able to distribute 9 times what they had, not everyone could get their money in cash. For this reason, a serious inclination towards cash occurred and the crisis was ignited. Simultaneously, due to the fact that it cannot be a means of payment in stock markets and other assets at the time of a crisis, it began to withdraw from the stock exchanges and the crisis began to turn into a global economic crisis and to make its impact felt in every region. Since the crisis began, world exchanges have experienced historic declines.

Economic Crisis Measures of 2020

After the crisis emerged prominently, the central banks in the world started making individual precautionary statements. As predicted, these measures were again to print and distribute money unlimitedly. What did we say, “it is worse than habitual vomit”…

The Federal Reserve of America announced that it will inject 2 trillion dollars into the market in packages of 500 billion dollars with day-to-day repo auctions.

Turkey’s Central Bank, the economy of $ 100 billion package announced that it would distribute the money through various channels.

The European Central Bank has announced that it will purchase 750 billion Euro back bonds.

The large amount of money printed did not relieve the current markets sufficiently. Even after the Fed, which first announced that it would print money, the markets did not even react. Because, the balloon that will cause an economic crisis has already exploded, and after the crisis started, printing money without limit has not been the result of pouring the cologne that we use to kill the coronavirus today, not pouring water into the fire. Because, let’s not forget that the main factor that caused the 2008 crisis was the unlimited printing of money that emerged with the radical change in the monetary policy of 1971. The main factor that led to the 2020 crisis, namely today’s crisis, was the unlimited money printing that continued more violently to overcome the crisis in 2008. That is why, as long as this policy does not change, these crises will always be inevitable, and every new coin minted will be a cologne, not a water for this fire.

Author Note

So far, in order to fully grasp the starting point of our article,economy”And“crisisWe presented an information inventory by blending the intersection points of the topics. Now we are moving to our main subject.

Safe Ports in Crisis (Gold, Silver)

In a crisis, we have said that markets and large companies are turning towards real cash and that the wick of the crisis is fired in this way. That is why there is a logical explanation for the fall of world stock exchanges in their safe ports, as a result of the contraction of large companies and markets in a crisis. In this explanation, since the main payment instruments will be provided by cash, not from cash, at the time of crisis, it is desired to sell safe ports and sell them to cash. If we summarize the matter in one sentence, you can’t get a cologne in gold or silver, right?

Let’s examine this information on charts during the 2008 Economic Crisis.

The dollar index (2008) increases 27 percent from 70 to 89.

Dollar Index 2008 Crisis

Gold (2008) drops 51 percent from the $ 1032 level to the $ 681 level.

Gold 2008 Crisis

Silver (2008) drops 61 percent from the $ 21 level to the $ 8.45 level.

Silver 2008 Crisis

As a result, the graphs show us once again that, in the event of a crisis, secure ports are losing value against cash, as well as world stock markets. If we state the explanation of this situation once again, secure ports are sold and converted into cash because they cannot be a major payment instrument in an economic crisis period.

Safe Ports When the Crisis Begins (Gold, Silver)

Countries are increasing their unlimited amount of money during this period, as economic crises can put larger companies in worse situations than individuals. In this case, it helps to alleviate the crisis by eliminating the cash shortage in the market soon after. In this case, it ensures that the negative effect initially created for safe ports reverses a serious positive effect. Because the value of the money, which is abundant in the market, results that the cash money may begin to be devalued after the cash needs are resolved. Therefore, in order to preserve the value of cash and even earn more money, cash holders return to Safe Harbor again. Let’s see these effects on the graphics.

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The dollar index, after rising after the 2008 crisis, started to fall sharply and fell 20 percent.

Dollar Index After the 2008 Crisis

After the 51 percent depreciation in the 2008 crisis, gold eliminated all losses and rose to 282 percent, reaching the heights that it had never seen before.

Gold After the 2008 Crisis

In silver, just like gold, it eliminated its fall in 2008 crisis and rose to the summits it has never seen before, valued at 590 percent.

Silver After the 2008 Crisis

As a result, with the graphics, we see that when the large amount of money printed at the end of the crisis started to overcome the crisis, these coins started to slide back towards the Safe Ports. In addition, since more money is available in the market (before the crisis) than before, safe ports can easily find the power they can take to new heights.

The Beginning of the First Bitcoin Age

Bitcoin, which emerged with the 2008 crisis, gained serious value in the process until today after entering its first stock market in 2010. Undoubtedly, the 2008 Economic Crisis had a great impact on the background of this valuation. Because the investors looking for a new safe haven after the crisis saw one of the newest and most promising of that period as Bitcoin, they made it so much that it reached its current position. As they say, there is a good in every evil, just like that.

The Beginning of the Second Bitcoin Age

Bitcoin’s serious valuation process between 2010 and 2020 “The First Bitcoin AgeWe called it. Since there is a new economic crisis in today’s 2020, with the idea that this picture may be similar, 2020-? and the processSecond Bitcoin AgeWe decided to call it ”. Now let’s begin to examine what might happen from this year, even if we do not know exactly when this period will end.

Bitcoin’s Response to the 2020 Crisis

Bitcoin is recognized by the whole world and, after becoming a popular investment tool, as a result of its first crisis, Gold and Silver, which is considered as a safe haven like itself, showed a similar reaction in the 2008 crisis and fell by 64 percent.

Bitcoin 2020 Economic Crisis

This situation shows us that even though a group of investors has shaken the trust in Bitcoin at first, knowing that gold and silver lost value in the face of a crisis in 2008 crisis, it can be accepted as usual.

Other Advantages of This Crisis Period in Terms of Bitcoin

  • In this crisis period, when we compare the amount of money the central banks pressed against the past crisis, we see that the rate has increased significantly. Therefore, since there will be much more money in the markets with this crisis than before, safe ports may have the potential to gain more value than before. This situation also has the potential to benefit Bitcoin very well.
  • The current crisis triggered by the coronavirus epidemic showed us that paper money is the vehicle that carries the most germs and viruses. This situation, which is also stated by the world health organization, will provide an additional advantage for this crisis only for Bitcoin and crypto money ecosystem that has contactless payment.
  • Bitcoin’s block reward split in May has the potential to be a good news for investors looking for a safe haven in the market, and has the potential to attract many investors with this development.
  • It is opposite to all the factors that make up the Bitcoin crisis. In this case, it puts it in a very advantageous position because the existence of a limited and decentralized structure with a certain monetary policy keeps Bitcoin seriously strong against the monetary policy of unlimited and indefinitely issued monetary policy.
  • Finally, as a technical analyst, if we support such basic analysis with technical analysis, we see that Bitcoin is in a possible symmetric triangle formation on the weekly chart. If this possible formation formation, after halving in May, will move towards the 6th region of the triangle and break that area upwards, the formation target will be $ 27,000 from that region.
Bitcoin May Halfway 2020

Summary

As we say goodbye to you at the end of the article, we want to state that the 2020 Global Crisis can be quite advantageous for the future of Bitcoin. Because this crisis, which we have shown in detail above, has the potential to be a very important factor that can ignite the wick of Bitcoin.


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