Risky Economic Policy Means Bitcoin’s Real Test Awaits, Says Crypto Attorney

Updated by Gerelyn Terzo
In Brief
  • Bitcoin's price and core value proposition have taken a beating in recent weeks.
  • Cryptocurrency attorney Jake Chervinksy warns that the real test for Bitcoin and its value proposition is still to come.
  • It remains to be seen how Bitcoin will respond to efforts by central bankers to stimulate their economies.
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Bitcoin has taken a massive hit to both its market capitalization and, for some, its core value proposition over the last week or two. However, lawyer and cryptocurrency industry observer Jake Chervinsky claims its real test is still to come.

Central banks have already started announcing radical plans to keep economies afloat amidst arguably some of the most uncertain times in living memory. For Chervinksy, the efforts of the Federal Reserve and other financial institutions will drive more people toward Bitcoin and the cryptocurrency industry as their impact becomes understood.

Federal Reserve Bitcoin

What Good Is Cryptocurrency if It’s Not a Hedge?

With Bitcoin sliding from more than $8,000 less than two weeks ago to its current price of just over $5,000, to say the cryptocurrency has been battered recently would be an understatement. As BeInCrypto has reported, many of those looking closely at the industry have been forced to question one of the asset’s potential value propositions. 

Industry analysts had previously argued that Bitcoin, being aloof from any existing financial system or government, should behave as a perfect hedge during times of crisis. As panic raced through markets and Bitcoin plunged alongside everything else last week, it became pretty difficult to continue making this case.

Those typically critical of Bitcoin, such as gold bug Peter Schiff, were obviously quick to cast shade on Bitcoin as it tumbled in tandem with other global markets. However, others too have questioned how anyone could even consider Bitcoin as an investment option given the recent price action:

For Jake Chervinksy, a legal specialist and cryptocurrency industry observer, Bitcoin was never meant to serve as a hedge against the kind of turmoil the markets have seen over the last week or so. The coronavirus pandemic, which serves as a backdrop to the current market turmoil, is what analysts often describe as a black swan event. For Chervinsky, the global economic situation is so grave, it’s not surprising that Bitcoin investors were spooked.

Chervinksy: Incoming Monetary Malfeasance Will Prove Bitcoin to Be Valuable

In the following tweet, Chervinksy goes on to state that the real test for Bitcoin and its value proposition is still to come. The lawyer contends that radical efforts at economic stimulus, like those starting to be rolled out by the Federal Reserve and other central banks, are the kind of events that Bitcoin was designed as a hedge against.

As he concludes, the jury is still out as to whether Bitcoin will respond positively or not to efforts of central bankers to stimulate their economies by injecting literally trillions of dollars. Given that the Federal Reserve has already started creating money to keep the US economy afloat and the Bank of England is now considering a “radical” money printing plan of its own, it looks like the world will get to see how Bitcoin responds to such measures first hand soon enough. [Sky News]


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