Energy is the master resource but it could be Bitcoin that reigns supreme – Crypto News – Crypto News
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Energy is the master resource but it could be Bitcoin that reigns supreme Energy is the master resource but it could be Bitcoin that reigns supreme

Cryptocurrency

Energy is the master resource but it could be Bitcoin that reigns supreme – Crypto News

Published

3 years ago

on

Haru Invest

Nothing shines a light on the importance of energy as much as a fast-approaching winter. When the temperature drops, the scarcity of energy becomes obvious and global efforts to preserve it begin.

This year, the fight for energy is more aggressive than it’s ever been.

The fiscal and monetary policies set in place during the COVID-19 pandemic caused dangerous inflation in almost every country in the world. The quantitative easing that set out to curb the consequences of the pandemic resulted in a historically unprecedented increase in the M2 money supply, This decision diluted the purchasing power and led to an increase in energy prices, sparking a crisis that is set to culminate this winter.

CryptoSlate Analysis has shown that the EU will most likely be the one hit the hardest by the energy crisis.

The European Central Bank (ECB) has been struggling to keep core inflation down this year. The Core Consumer Price Index (CPI) began to increase substantially in 2021 due to the pandemic both in the US and the EU

The US has seen its Core CPI decrease sharply since its culmination in February and posted better-than-expected results last month. However, Core CPI in the Eurozone has continued to increase throughout the year and currently shows no sign of stopping.

core cpi
Graph showing the Core CPI in the US and the Eurozone from 2017 to 2022 (Source: The Daily Shot)

A similar increase in Core CPI can also be seen in Japan and the UK One of the factors that may have contributed to their monetary instability is a lack of investment and support for commodities like oil and gas. Widespread efforts to switch to renewable sources of energy led to a decrease in oil and gas purchases in the EU and the UK

In contrast, the US and Russia have been investing heavily in oil and gas and promoting innovation in the field.

Looking at the value of fiat currencies against the US dollar further confirms this effect.

The Russian Ruble and the DXY have both increased in value in the past two years, while the euro, British poundand Japanese Yen have all seen their Dollar value decrease.

global fiat currencies
Graph showing DXY, GBP, EUR, JPY, and RUB and their value against the US dollar (Source: TradingView)

With rising inflation and a seriously weakened currency, the EU will have a hard time competing for oil and gas on the global market. Natural gas producers warning that almost all long-term contracts for natural gas coming out of the US have been sold out until 2026. Until then, when a new wave of natural gas supply is expected to come, the EU will have to compete with Asia for the limited supply. and swallow the high gas price.

All of this uncertainty could have a positive effect on Bitcoin. While the broader crypto market struggles to remain afloat after the FTX fallout, Bitcoin has positioned itself as a pillar of stability in a market plagued with bad actors. Devalued fiat currencies could push retail investors away from safe-haven assets like gold and commodities and toward an asset like Bitcoin.

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