Is Bitcoin’s Price Going to Fall? Here’s What Prof. Jeremy Siegel Believes

Jeremy Siegel, emeritus professor of finance at the Wharton School of Business at the University of Pennsylvania, is reported to predict that the price of Bitcoin will fall when people feel safe to deposit in the bank again. I hope that the Federal Reserve will restore 5% growth in the money supply, which is consistent with 2% inflation and 2-3% real economic growth. When the money supply in the past 12 months has decreased as we do now, this is a liquidity issue.

Wharton Business School Professor: Bitcoin will fall after the banking crisis

Introduction

With the growing acceptance of Bitcoin and other cryptocurrencies as a legitimate form of investment, many people are curious about where the market is headed. Recently, Jeremy Siegel, an emeritus professor of finance at the Wharton School of Business at the University of Pennsylvania, made a prediction that has caused quite a stir. According to Siegel, the price of Bitcoin will fall when people feel safe to deposit money in the bank again. In this article, we will delve deeper into Siegel’s prediction and explore its potential implications.

What is the Basis of Siegel’s Prediction?

Siegel’s prediction is based on a simple principle of economics – when people feel comfortable with traditional forms of investment, they are less likely to take risks with their money. Siegel believes that when the Federal Reserve restores 5% growth in the money supply, then people will feel confident enough to deposit their money in banks. This, in turn, will lead to a decrease in demand for cryptocurrencies like Bitcoin, causing their prices to fall.

Understanding the Relationship Between Money Supply and Bitcoin

Siegel’s prediction is based on the premise that when the money supply decreases, it leads to a liquidity issue. A liquidity issue occurs when there is not enough cash available to meet the demands of the market. This has a direct impact on Bitcoin’s price because the cryptocurrency is often used as a store of value. As the money supply decreases, people become more interested in investing in Bitcoin to safeguard their wealth.

What Does Siegel Mean by 5% Growth in the Money Supply?

According to Siegel, a 5% growth in the money supply is consistent with a 2% inflation rate and 2-3% real economic growth. This growth is important because it keeps the economy running and ensures that there is enough money in circulation to meet the demands of the market. When the money supply decreases, as we are currently experiencing, it creates a liquidity issue, which can lead to a decrease in confidence in traditional forms of investment.

Impact of the Federal Reserve’s Actions

Siegel’s prediction is dependent on the actions of the Federal Reserve. If the Federal Reserve moves in the direction of increasing the money supply, it will have a direct impact on Bitcoin’s price. When people feel that traditional forms of investment, such as banks, are safe, they will be less interested in investing in Bitcoin. This will lead to a decrease in demand, causing the price of Bitcoin to fall.

Conclusion

Jeremy Siegel’s prediction that the price of Bitcoin will fall when people feel safe to deposit money in the bank again is based on a sound economic principle. The actions of the Federal Reserve will determine the direction of the market, and the fate of Bitcoin. It is important to understand that Bitcoin is not immune to the fluctuations of the market, and its price is dependent on several external factors. Investors should always do their research and exercise caution when deciding to invest in cryptocurrencies.

FAQs

1. Is it safe to invest in Bitcoin now?
– As with any form of investment, investing in Bitcoin comes with a certain amount of risk. It is important to do your research and exercise caution before investing in any cryptocurrency.
2. What actions can the Federal Reserve take to increase the money supply?
– The Federal Reserve can undertake several actions to increase the money supply, such as lowering interest rates, purchasing government securities, and implementing quantitative easing.
3. Can Bitcoin’s price fall due to other factors besides the money supply?
– Yes, there are several factors that can impact Bitcoin’s price, such as government regulations, market sentiment, and technological developments.