The Coronavirus Pandemic has caused perhaps the worst economic crisis in modern history, and this crisis is on par or even worse with the Great Depression since over 40 million Americans are now unemployed. The stock market saw an epic crash as well, with major American stock indices crashing 40% in just a month between mid-February and mid-March. The stock market crash would have been even worse if central banks didn’t jump in and print incredible amounts of money to stimulate the economy, and now the true scale of global central bank money printing is coming to light.
Apparently, central banks have printed over USD 18 trillion globally, as seen by skyrocketing balance sheets among G-6 banks, which includes the United States Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan, the Reserve Bank of Australia, and the Bank of Canada. Specifically, the Federal Reserve, European Central Bank, and Bank of Japan have printed most of this USD 18 trillion.
Putting this situation in a crypto perspective, the total crypto market cap is USD 270 billion, which is equivalent to USD 0.27 trillion. This means that these banks have printed 66.7 times the amount of the total crypto market cap.
Literally, if you aggregate the value of all of the crypto coins and tokens and existence, and multiply it by 66.7 times, then that is how much money they have printed in the first half of 2020.
Of course, it is difficult to comprehend this amount of money. Another way to think about it is if each USD dollar bill was stacked up it would create a tower that is 1,965,960 km high, which is enough to extend to the orbit of the moon, which is 384,400 km away, and then this stack of cash would extend many times past the moon. Truly, central banks have printed an astronomical amount of money so far in 2020.
Further, they have printed this USD 18 trillion just to put the brakes on the economic crash but the economy is still critically bad, and far more money printing will be needed over the coming months and years to prevent an economic meltdown.
Ultimately, this obscene level of money printing will lead to fiat currency devaluation, i.e. inflation. This is because if more money is printed into circulation out of thin air, then that increases the amount of circulating money, and the prices of goods and services go up. Therefore, although there may be more money flowing through the economy, the value of each unit of fiat currency will go down.
Although this is a negative factor for everyone in the world who is holding fiat currency, this massive amount of money printing will likely be a positive force for the crypto market. Essentially, fiat currency devaluation will likely cause an increased amount of crypto investment, as people move their funds from fiat into crypto in order to avoid inflation.
In other words, cryptocurrency is a safe haven from fiat currency inflation, and the USD 18 trillion of money printing in 2020 and the associated fiat inflation will likely increase the use of crypto as a safe haven.
On a final note, this effect will likely be seen most in countries with weaker economies, such as Venezuela, Turkey, and Lebanon. The tremendous amount of money printing so far in 2020 is literally the nail in the coffin for the fiat currencies of countries where hyperinflation was already a problem before the Coronavirus. That being said, even in the United States and Europe, it is likely that the use of crypto as a safe haven will increase.
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