What next for Bitcoin as it evolves into an asset class?
Matein Khalid
The past decade dramatically illustrates the peril of trusting paper money as a store of value in a political system designed to pivot recklessly towards deficit financing and deliberate debasement of the world's reserve currency. The US national debt is now $37 trillion and the annual budget deficit is now $2 trillion or 125% of GDP. Add political gridlock in Washington, violent migrant riots in Los Angeles and even ghastly political assassinations in Minnesota and I see echoes of a classic emerging market crisis brewing in the heart of the US capital markets. So I have been a papa bear on the US dollar since late 2024 but I know that the Euro, British pound and gold are also flawed as stores of long term value in a world where war, inflation, currency crisis, trade conflicts and chronic sovereign debt accumulation is a given.
Bitcoin definitely has a place in the sun as the fiscal Frankenstein taints almost all versions of central bank Monopoly money. My biggest problem with Bitcoin is its psychotic volatility and its extreme correlation with the Nasdaq 100. Yet this is an opportunity also when spasms of risk aversion create buying opportunities, as happened in early April when Bitcoin plunged to a juicy $73000 when the stock market plunged 19% after Wall Street was unhinged by Trump's Liberation Day tariff wars.
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It is now difficult to swallow the gospel that US Treasury bonds are the world's ultimate risk-free havens and that the omniscient, omnipotent Federal Reserve conducts its dual mandate without political interference from the White House. In a world where the President berates the Fed Chairman as 'loco'/'dumb' and the Treasury Secretary meekly echoes his Dear Leader's half literate outburst on trade and global economic relations, the North Korea dimension in US policy making has made global investors flee the greenback with good reason.
As the world loses faith in the Fed, Congress and the illusion of global monetary stability, it is obvious that a rise in interest rates will trigger a Black Death in asset valuation worldwide, another legacy of a decade where the world's central banks printed trillions of dollars to monetize fiscal deficits from America to Japan, Europe to China. Crypto currencies thus become a safe refuge in such a world where wealth can be vaporized on a mega scale in an instant. Take the US dollar. Every investor, saver and business in the Gulf has lost 12% of their net worth in 6-months as the US dollar index plunged from 110 in January 2025 to 97 six months later. The US has now joined Israel in a war with Iran, whose outcome could well include inflation, fiscal ruin and a shattered world geopolitical and economic order. Doing nothing to protect assets in such a world is akin to being a lamb ready to be fleeced on the path to the slaughterhouse.
As Wall Street embraced digital assets and indexation amplifies the passive investing universe, I expect volatility on Bitcoin to fall. The halving cycle creates distinct market cycles that technology will only help us fathom and capture in our trading strategies. My guesstimate is that we see a $80,000 to $150,000 Bitcoin trading range in the next 12 to 15 months even as I am alert to the arrival of entire flocks of malign black swans on the investment horizon.
Digital gurus believe that Bitcoin will attain asset class status that would imply a peak price of $800,000 in the next decade even as secular volatility falls, as it did for Amazon, Nvidia, Google and Meta overtime. Gold is 10X Bitcoin as an asset class now but AI will converge with DeFi in the biggest megatrends of our lifetimes to midwife a financial future replete with limitless possibilities and risk. That much, at least, is certain!
Also published on Medium.
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