March 4, 2024

Deutsche Bank: cryptocurrencies on the verge of a breakthrough decade

The next decade could be a breakthrough time for cryptocurrencies, as the existing fiat systemdoesn’t look stable, says Deutsche Bank analyst Jim Reid.

In an analytical report by Imagine 2030, Reid noted that rising doubts about the stability of state currencies will lead to an increase in the popularity of cryptocurrencies.

«The forces that held the existingfiat system now look fragile and could collapse in the 2020s. This will lead to a backlash against fiat money, and the demand for alternative currencies such as gold or crypto may increase.- he said.

The raid recalled uncontrolled inflation and the jump in gold prices that followed in the 1970s after the collapse of the monetary system backed by the precious metal.

Strategist noted that not central bankscoped with global inflation. China has become a major deterrent due to a significant increase in labor supply over the past four decades.

But it ends because the country passed the peak of the working-age population in the previous decade, Reid emphasized.

This may cause governments tobegin to build up debt, increasing budget spending and abandoning a tight monetary policy that is beneficial to owners of capital and assets, but not labor.

«When labor costs rise rather than fall, the environment will be more challenging for policymakers. And where politicians are worried about elections, inflation is likely to be the victim.- he noted.

The constant increase in inflation will lead to doubts about the stability of state monetary systems and the growth in demand for alternative currencies, says Reid.

«Will fiat currencies survive the politicalThe dilemma authorities will face as they try to balance rising revenues with record debt levels? This is the trillion-dollar (or bitcoin) question of the decade.- the analyst concluded.

Recall that according to the ex-world champion inGarry Kasparov’s chess, governments create financial bubbles by printing money in unlimited quantities, while bitcoin has limited emissions.