Happy Birthday, Bitcoin!
Fourteen years ago today, on January 3rd, 2009 the Bitcoin blockchain mined its first-ever block. I want to compare Bitcoin with the two indexes it tends to follow and how all three of them will react in this new year, the young, the old and the new.
The global economic conditions were quite different 14 years ago however, 15 years ago does share some scary similarities to current times and I believe the conditions will mimic those of 2009 at the end of 2023 or the beginning of 2024.
In 2009 we had just come out of a period of elevated interest rates and inflation. In 2007 and 2008 the US had inflation over 5%, and a Fed funds rate of 5% also, much like today. At the beginning of 2009, both inflation and interest rates dropped to their lowest levels in history (data going back to 1955). In August 2209 the CPI made an all-time low below -2%, at the same time the Fed Funds rate was also at its lowest level in history Averaging 0.14% in January 2009.
In this era of cheap money, Bitcoin was born at the same time that the major US equities like the Nasdaq composite and the S&P 500 began their historic ascent carving a linear path to their respective all-time highs, all three of them, within a month of each other! Coincidence? Hardly.
The question then becomes when will see another period of American and global paper currencies compete in the great race to zero? It’s only a matter of time because even with all the doom and gloom spewing out of people’s mouths today, we are living in a time of great prosperity and abundance. We as a species are developing technologies tomorrow that has the potential to make life easier for us in ways we can’t even imagine today. As such life will prosper and rise again and so will the three pillars of our cultish economy with the S&P 500 that just made it to a century old, the Nasdaq the middle-aged 50-year-old technologies index, and the now 14-year-old Bitcoin.
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