Bitcoin will rise to 1 million dollars. You may find this unbelievable, but please patiently read my following analysis.
Many people wonder how a decentralized virtual currency without physical backing could possibly be worth so much. This is mainly because most people's understanding of Bitcoin is limited to the 'currency value' level.
Given Bitcoin's scarcity, some believe that Bitcoin, like gold, will become hard currency, and thus Bitcoin is referred to as 'soft gold.' These people believe that Bitcoin can replace the dollar and hedge against the dollar's devaluation, which is not entirely correct. The value of Bitcoin is not to replace the dollar but to cooperate with it.
Currently, dollar debt has reached 35 trillion, which is higher than the annual GDP of the United States, and it is expected to rise even more in the future. The growth rate of debt exceeds the growth rate of GDP. Through conventional means, the United States cannot repay the snowballing debt. With such high debt, what should be done? If not repaid, there will be a default, and dollar credit will disappear. These circulating dollar debts definitely need to be repaid. How to repay? Only through massive money printing and flooding. Everyone knows that printing money and flooding will cause a significant devaluation of the dollar, losing its status as the world's number one currency. In the early days, the dollar was pegged to gold, but gradually, too much money was printed, making it unsustainable. Then it was pegged to the emerging liquid gold, oil, but with the rise of new energy, the importance of oil is also gradually diminishing. So, how can the over-issued dollars be diluted? That's right, at this moment, Bitcoin shines. Compared to the scarcity of physical assets, decentralized virtual currency is a better reservoir for dollars. Virtual currency is a naturally isolated group; its price increase does not lead to significant physical inflation. Therefore, the scarcity of virtual assets has become a more perfect reservoir for dollar debt and over-issued currency. As dollar debt continues to increase, the over-issued dollars will largely transfer to the appreciation of Bitcoin, pushing up Bitcoin's price. This is also the fundamental logic behind the major capital firms in the US increasing their Bitcoin holdings, which will also encourage some enterprises and other countries to hold it. As dollar debt rises, dollar over-issuance increases, and Bitcoin appreciates, holding Bitcoin becomes an asset.
Some may say that virtual currency is decentralized, with good security and privacy, but don't forget that the circulation of virtual currency requires virtual currency exchanges. The government cannot regulate virtual currencies, but it can regulate the exchanges. Indirectly, virtual currency can still be subject to human regulation and has not achieved true decentralization.
Once the virtual currency pool accumulates funds from around the world, if non-US institutions or countries acquire the virtual currency and dominate, the American institutions in this currency pool may team up and flee, transferring the 'water' in the pool to other holders, leading to a plummet in currency value. Bitcoin will become a liability, and the massive 'water' in the currency pool will evaporate into thin air, perfectly converting into dollars. Even if no other institutions take over, the dollar debt will continuously flow into this currency pool, gradually increasing and pushing up Bitcoin, without affecting the real economy of the United States.
In short, Bitcoin is a perfect tool for the dollarization of debt.
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