The European Central Bank (ECB) is preparing for a COVID-19 induced bad debt tsunami that could well prompt many to turn to Bitcoin (BTC) and other cryptos. 

Europe prepares for economic meltdown

As the ECB doubles its COVID-19 stimulus support measures to a staggering €1.35 trillion, officials are bracing an unprecedented economic crisis.

According to a 10 June Reuters report, insider sources have confirmed the ECB is planning to set up a ‘bad bank’ to handle what could be hundreds of billions of euros of unpaid loans resulting from a COVID-19 induced economic collapse. 

It seems the ECB is expecting mass unemployment across the continent, as thousands of businesses collapse in the wake of the COVID-19 lockdowns, and a resulting mass defaulting on debt obligations, including credit cards, personal and business loans, mortgages, and car financing agreements. 

Needless to say, for a continent that was already carrying an estimated USD $500 billion bad debt before the crisis hit, the results could be utterly catastrophic. And that’s not even taking into account the growing likelihood that more waves of COVID-19 will force further lockdowns.

To try and mitigate the effects of the upcoming financial crisis, the ECB is said to be looking at setting up an asset management company, or so-called ‘bad bank’, to protect other lenders from the worst impacts. 

Meanwhile, across the Atlantic, the US Federal Reserve is also accelerating its money printing, even though its balance sheet now stands at an eye watering $7.16 trillion. Illustrating the gravity of the situation, $3 trillion has been added in just three months. 

Crypto world watches with sense of inevitability

Despite many in the traditional financial world having their heads buried very deeply in the sand, cryptocurrency advocates have been watching events unfold with a sense of inevitability. 

Last month, as the 629,000 BTC block was mined during the halving, a message was inserted by f2pool reading “NYTimes 09/Apr/2020 With $2.3T Injection, Fed’s Plan Far Exceeds 2008 Rescue”. The message was a nod to the note left in the Genesis block back in 2009, by the enigmatic Satoshi Nakamoto, that read “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

These ominous messages are a reminder that Bitcoin was created out of the ashes of the 2007-2008 Financial crisis, as an alternative to what many saw as a doomed fiat monetary system. Now, as a crisis of a magnitude of order greater in scale approaches, many think we will now see Bitcoin truly come of age. 

Indeed, over the past few months we’ve seen a flood of experts and analysts make startling predictions of an imminent Bitcoin (BTC) bull run. Just yesterday we reported that Cane Island Alternative Advisors’ Timothy Peterson had noted an “almost perfect” correlation with 2013, when Bitcoin embarked on a 700% bull run, and pointed out that if the correlation continues, it could result in $75K BTC within weeks. 

Will the traditional monetary and economic system manage to recover from the COVID-19 crisis by hiding a mountain of bad debt and furiously printing more money? Or will we see the wheels finally come off and a systematic collapse, resulting in a dramatic ascendency of cryptocurrencies and digital assets like Bitcoin (BTC)? 

With 2020 looking more like a dystopian science fiction movie everyday, all bets are off. 

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