The
price of Bitcoin could hit more than $2,000 in 2017 driven
by expectations that U.S. President-elect Donald Trump may introduce economic
stimulus policies, which could send inflation soaring and propel the dollar to
record highs, a report from Saxo Bank claims.
Bitcoin
is currently trading around $754.51, according to CoinDesk data. A handle of
over $2,000 would represent 165 percent appreciation.
During
his election campaign Trump has talked about an increase in fiscal spending.
Saxo Bank's note said that this could increase the roughly $20 trillion of U.S.
national debt and triple the current budget deficit from approximately $600
billion to $1.2-1.8 trillion, or some 6-10 percent of the country's current
$18.6 trillion economy.
As
a result, the economy will grow and inflation will "sky rocket",
forcing the U.S. Federal Reserve to hike interest rates at a faster pace and
causing the U.S. dollar "to hit the moon".
When
inflation rises the Federal Reserve may raise interest rates to bring it under
control. This causes the dollar to appreciate because it would be seen as an
attractive currency for foreign investors.
"This
creates a domino effect in emerging markets and China in particular, leading
people globally to look for alternative forms of currencies and payment systems
not tied to central banks that have exhausted monetary policies or crony
governments that are in full financial repression mode nor transaction systems
that are long overdue for a revolution," Steen Jakobsen, chief economist
at Saxo Bank, wrote in a note.
Bitcoin
as the largest cryptocurrency would benefit from this "chaos", he
added, as emerging market countries look to move away from "being
tied" to the monetary policy of the U.S. and banking system.
Benoit Tessier | Reuters
"If
the banking system as well as sovereigns such as Russia and China move to
accept Bitcoin as a partial alternative to the USD and the traditional banking
and payment system, then we could see Bitcoin easily triple over the next year
going from the current $700 level to +$2,100
