When NIA suggested Bitcoin on May 30, 2016 at $530, the Bitcoin Price (x1MM) to Weekly Bitcoin Transactions Ratio was only 347 – below its long-term average of 449. Today, with Bitcoin up to a new record high of $3,335.48 the ratio is up to 2,284, which is 4 standard deviations above the long-term average.
Shockingly, Bitcoin’s fundamentals have been rapidly deteriorating in recent weeks – but with today’s Federal Reserve fueled hyperinflationary asset price environment – fundamentals no longer play any role in determining the price of an asset.
Since May 27th, weekly Bitcoin transactions have plunged by -38.53% to 1.46 million, yet the price of Bitcoin has soared 65.61% to $3,335.48. The record high Bitcoin Price (x1MM) to Weekly Bitcoin Transactions Ratio from back on January 5, 2014 is 2,436. If Bitcoin is able to successfully reach the record high ratio from the peak of its last bubble, based on current weekly transactions of 1.46 million it would equal a Bitcoin price of $3,556.56.
You will never find a single post on social media of people talking about how much they love using Bitcoin. All you see are people who love Bitcoin for its price continuing to go up! They explain that Bitcoin is not a bubble because the supply can never rise to more than 21 million.
The Bitcoin block size was always supposed to be limited to 1MB, but last week’s fork will allow Bitcoin’s block size to increase in November to 2MB. If the initial block size limit was so easily increased, even though it was supposed to be permanent, there is no way to guarantee that Bitcoin’s artificial supply limit won’t be increased in the future – along with the elimination of Bitcoin halving.
Today, the artificial supply limit makes it much easier to promote Bitcoin and create the false perception that its a safe/stable store of value. In the future as the Bitcoin inflation rate slowly declines, greedy Bitcoin miners are likely to decide that it’s not profitable enough to mine Bitcoin for transaction fees alone. They will declare the artificial supply limit and halving to be a threat to Bitcoin’s survivability, just like the U.S. government declared the gold standard a threat to America’s economic stability.
Some people in the Bitcoin community wanted to raise the block size all the way to 8MB, and to appease both sides – last week’s fork created a new ‘Bitcoin Cash’ cryptocurrency that got spun-off to all Bitcoin holders.
Fundamentally, the spin-off of Bitcoin Cash should have caused the price of Bitcoin to decline by an amount equal to the price of Bitcoin Cash. The fact that Bitcoin is in its mania phase and this didn’t happen – has caused Bitcoin enthusiasts to see it as magic and believe that cryptocurrencies offer a special power to create new assets worth billions of dollars out of thin air.
Due to incredibly huge greed in the Bitcoin community, NIA predicts that more “Bitcoin clones” will be unleashed in the months ahead – and there will be massive hype for the next Bitcoin spin-off… with everybody excited to receive more free money, printed out of thin air! Eventually, reality will hit people that even if the artificial supply limit of 21 million Bitcoin stays in effect, there’s nothing to stop greedy Bitcoin miners from spinning off 21 million Bitcoin clones of the same intrinsic value (zero).
If Bitcoin prices soar any higher, the Federal Reserve is going to begin viewing Bitcoin as a major threat to the U.S. banking system and Congress will feel compelled to make all cryptocurrencies illegal. Only the Fed’s primary dealers and their closest friends are supposed to profit from the Fed flooding the financial system with excess liquidity, but millennials are now copying the Federal Reserve and capitalizing on their destructive actions. Crytocurrencies are helping to expose America’s ponzi scheme economy, being kept afloat by the dying petrodollar system.