Bitcoin Still Has Bulls as the US Economy Continues to Decline

The S&P 500 fell by over 2% to end last week, as US stocks saw their seventh consecutive week of losses. Stocks have been falling all year as central banks, led by the US Federal Reserve, rapidly unwind stimulus measures to bring down inflation from historic highs. According to a Goldman Sachs report, investors also erased $5.2 billion from global equity mutual funds this week, bringing outflows over the past four weeks to approximately $16 billion. The Russia-Ukraine conflict has also disrupted supply chains and raised commodity prices, further straining the global economy. At the same time, there are new indications that economic growth may be faltering across major global economies.

Federal Reserve President Seeks Larger Rate Increase

Federal Reserve Bank of St. Louis President James Bullard said last week regarding interest rates that "we should get to 3.5% by the end of the year," a hawkish stance that surpasses that of Fed Chairman Jerome Powell. Rapidly increasing interest rates is part of the Fed's effort to front-load the effects of rate increases as soon as possible to allow the economy to slowly offset the remaining effects of the last two years' fiscal policy.

Bitcoin Advocates Hold Strong Despite Price Declines

Several long-term bitcoin investors have recently spoken about their bullishness for the digital asset, even with its price down over 50% year-to-date. Microstrategy CEO Michael Saylor told Yahoo Finance, "There's no price target . . . I expect we'll be buying bitcoin at the local top forever. And I expect bitcoin is going to go into the millions. So we're very patient. We think it's the future of money." This sentiment is attributed to a more significant idea surrounding bitcoin's long-term value proposition as a scarce, resilient digital asset. Many investors in Bitcoin subscribe to this buy-only thesis and execute a dollar-cost average strategy to buy Bitcoin consistently.

Jack Dorsey and Block Refocus on Bitcoin

At Block's first investor day since 2017, Jack Dorsey highlighted the framework for the company to focus on Bitcoin over the next five years. Dorsey noted that Block is more than "just a payments company" and that payments are only a subset of their overall focus. Block, recently rebranded from Square, was founded in 2009 and first enabled credit card payment processing through mobile phones.