Let’s try to make a prediction of what we might expect in the coming year.
In this special article, we embark on the reckless feat of predicting the future.
Of course, the chances of getting it right are minimal. But let’s play guessing games for a while. And if we happen to get some things right, well, it was by chance. The future is impossible to predict. What we can actually do is make assumptions about the future with the little information we have at hand. We don’t know much, but we do know something. And on those probabilities we can make a bet. We won’t really talk about the future. But let’s pretend we are. We talk about the future with poetic license. The future as expectation. Bitcoin in 2021.
What awaits us?
The big question: Will we surpass $50K in 2021? Well, it’s possible. In fact, it’s extremely likely, if the current enthusiasm is maintained for the rest of the year. Of course, we would need more announcements. I mean more institutional purchases, more adoption, and more FOMO. The approval of an EFT would be the glory. Any instrument that more effectively channels the entry of institutional capital into the world of cryptomonies will help the price boom.
On the other hand, a possible setback could come from the regulatory field in the United States and Europe. For now, that danger is hypothetical, because there is nothing concrete that represents a specific threat. The authorities are very busy solving the problems related to the coronavirus crisis. And the favorite villain at the moment is big technology companies such as Facebook or Google. Politicians want to cut off some heads to please the bloodthirsty public. A giant must fall to create the illusion that inequality is a problem that concerns politicians. Anyway, for now, Bitcoin is not on the scapegoat list.
The truth is that everything seems to indicate that 2021 will basically be an extension of 2020. At least, during the first semester of the year, things won’t be so different. Will unemployment return to 4%? Will inflation exceed 2%? Are the financial markets overvalued? Not yet. It is possible that things will start to change gradually from the second half of the year. But, during the first months of 2021, the situation will be quite similar to the last months of 2020.
The coronavirus has accelerated several processes and this will continue in 2021. The deglobalization of the world, the digitalization of the world, and the deepening of the rivalry between China and the United States. All of this in the context of an increasingly unequal world. Tourism will be reduced, migration will be reduced, and remittances will be reduced. But online trade, digital payments, and teleworking will continue to increase dramatically.
This recovery is K-shaped, in large part, because this is primarily a service sector crisis. The poor and the middle class have suffered a lot. Small businesses have suffered a lot. And cyclical businesses have suffered a lot. But the rich, the financial markets, Bitcoin, and the technology sector have benefited a lot during this period.
The Federal Reserve’s monetary policy has mainly benefited the financial markets, because almost all the liquidity has been used to buy financial assets. While it is true that consumer price inflation has not increased sufficiently, this is limited to goods and services. That is, the cost of living. But this is obviously not including the prices of assets like stocks and Bitcoin. In other words, the stimuli were used to make buybacks. Big capital received a lot of dollars, but it all stayed in the financial markets and didn’t move into the real economy.
Of course, that doesn’t imply that the Federal Reserve did anything wrong. The Fed did the only thing it can do. Here the big absentee has been the fiscal stimulus. That is, public spending. Aid in this sense has been very timid, due to the blockade by the Republicans because of a doctrinal issue. At this time, a new aid package is being discussed that will put some liquidity into the economy, but, due to the Republican blockade, more than a significant stimulus is a small relief that will not have much effect. Of course, it is possible that next year’s packages will be a little more generous, despite the Republicans.
Now, the Joe Biden administration. On the monetary front, a change in administration doesn’t affect Federal Reserve policies much. Rates will remain the same. And almost everything will stay the same on this front. At least for a while. On the fiscal front, you could see a change. But I’m afraid we won’t see a very dramatic change, because Biden is taking over the White House with a Republican-controlled Senate. Or I know