All the way forward! How long will cryptocurrency be popular after bitcoin’s market value surpasses Tesla?

In just three weeks, bitcoin, the leader of cryptocurrency, has ended its decline at the beginning of the new year and is marching towards a new peak. Bitstamp platform data showed that bitcoin continued to rise on the 14th, breaking through 49500 US dollars / piece at one time. According to the latest data from assetdash, the market value of bitcoin has exceeded US $880 billion. After overtaking Facebook last week, bitcoin has surpassed Tesla and leapt to seventh place in US stocks. At the end of last month, musk changed the profile of Twitter to “ාbitcoin”, which instantly exploded the coin circle. Bitcoin stood at 36000 US dollars on the same day, with an increase of more than 7%. Musk then publicly expressed his support for bitcoin, saying that bitcoin is a good thing. A week later, Tesla said that as part of its latest investment policy in January, it had invested a total of $1.5 billion against the currency and was likely to acquire and hold digital assets from time to time or over a long period of time. It is expected that bitcoin will be accepted as the payment method for its products in the near future. On the day of the announcement, Royal Bank of Canada capital markets also said that Apple may be the next company to buy cryptocurrency and should develop Apple wallet into a cryptocurrency exchange. At present, the world’s two major technology giants have increased the size of bitcoin, pushing bitcoin to break through the four levels of 45000, 46000, 47000 and 48000 in the second day. The market value of bitcoin has risen to No.8 in the US stock market, surpassing Facebook and ranking only after Tesla. At the same time, it has driven the block chain concept stocks of US stocks in the 9th day to rise sharply. In addition to bitcoin, the dog coin, which is a new upstart in the currency circle, is also in a strong momentum. Musk’s wave of online marketing on social platforms has made some “non mainstream” dog coins in the currency circle. It has not only become a hot target in the investment circle, but also won the title of “the first generation of goods king in the currency circle”. On the day bitcoin broke the 480 million mark, dogcoin rose by more than 28% in 24 hours. It once hit a record high in the session, with a market value of US $10.5 billion, ranking among the top 10 cryptocurrencies in terms of market value. The annual growth rate is nearly 3 times, and “digital gold” is gradually approaching? What happened to bitcoin? Not just now, this is one of the fixed sentences in the investment circle in the past year. Because in the global capital market, bitcoin has become the asset class with the highest increase since the beginning of last year, even surpassing the faamng technology giant index. As of December 28, 2020, bitcoin prices have nearly tripled from $7200 at the end of 2019 to $27084. If we calculate from the lowest bitcoin price of US $3783 in March of the beginning of the year, the increase is more than six times. In addition, the issuance scale of stable currency expanded 3.5 times, reaching a record high of US $27 billion. The soaring bitcoin has driven the global cryptocurrency buying boom. According to coingecko, as of June 6, the current global cryptocurrency market value has exceeded 1.2 trillion US dollars, and the top three are bitcoin, Ethereum and TEDA. At the same time, the global stock market is in turmoil all year round under the influence of the epidemic situation. Under this background, bitcoin may become “digital gold”, which has become a kind of view of the bulls. Some market views believe that bitcoin will replace gold and become the new king of safe haven assets in the world. At the end of last year, Chris wood, head of global equity strategy at Jeffrey group, a famous investment bank on Wall Street, said that bitcoin was rising continuously, which was a better way to store value than gold. He believed that physical gold investment, which accounted for 50% of the previous portfolio weight, would gradually decrease by 5% in the next few years. The money will be used to invest in bitcoin. According to the report of song Jiaji team of Guosheng securities on December 21, 2020, bitcoin, as an electronic cash system, can not be used as a currency and its bookkeeping platform due to its volatile price and fixed issuance mode of halving in four years. However, its fixed total amount, indestructible, extremely convenient carrying and convenient online trading mode make the distance between bitcoin and digital gold gradually approaching. However, some institutions hold different opinions. According to the report of Zhaowei team of Kaiyuan securities on January 23, 2021, gold and U.S. debt can become high-quality hedge assets because they can reduce their hedging risk preference and have the characteristics of low volatility, high liquidity and large market value. Compared with the former, bitcoin has high volatility, poor liquidity, and very small market value. Moreover, looking back to the historical data, during the period of drastic adjustment of risk assets, bitcoin often falls sharply simultaneously: since 2018, the S & P 500 index of US stock has undergone three drastic adjustments, with a decline of 8.5%, 19.1% and 33.7%; in the same period, bitcoin has fallen by 21.6%, 37.5% and 32.4% respectively. However, although bitcoin does not have the nature of risk aversion, due to the fact that it can perform some general equivalent functions and its quantity is relatively scarce, the price of bitcoin actually implies the expectation of becoming a global “value preserving currency”, which often rises sharply in the stage of “big water release” of mainstream central banks. In view of the rapid rise in the price of bitcoin, auco cloud Chain Research Institute believes that for institutional investors, it is profit rather than “bitcoin belief” Or “blockchain revolution”, when small and medium-sized investors or users of the original currency circle collectively set foot on the rise in the first stage, they began to flood into the bitcoin market in the second stage, and the whole market was excited, so the price rose so fast. The auco cloud chain research institute further pointed out that after the vaccine was launched and the epidemic situation was gradually alleviated, the monetary policy will gradually change from loose to moderate tightening, and institutional investors are likely to sell bitcoin at that time. The price of bitcoin fluctuates greatly, and the risks can not be ignored. The hype is over and then empty? After pushing bitcoin and dogcoin to the historical peak, musk tweeted: if the main holder of dog coin sells money, then I will give it my full support. In my opinion, too much concentration is the only real problem. Bitcoin, Ethereum, etc. fell in response. Apart from the real intention behind Musk’s move, what he said reflects is just one of the potential crises of bitcoin, which also determines its upper limit and the key to its future development path. It is worth mentioning that in the continuous heat of musk and the currency circle, there are some critics who question the supervision measures of cryptocurrency. The excessively high concentration mentioned by musk also reflects that the word “supervision” has become one of the main obstacles to the development of cryptocurrency in the future. Because its legitimacy has not been widely recognized, bitcoin is free from the “gray zone” of law and regulation in most countries, and its price is easily disturbed by changes in regulatory policies. In December 2017, after the IRS announced that it had the right to obtain cryptocurrency information to strengthen anti money laundering and prevent tax evasion, the price of bitcoin fell sharply; in March 2018, after the IRS announced that it would impose taxes on cryptocurrency transactions, bitcoin prices adjusted sharply again. Zhao Wei’s team further pointed out in the above report that bitcoin, as a crypto private currency, its core value only comes from the public’s belief that it can be used to exchange legal tender such as goods, services and US dollar. In the future, whether there will be legal digital currency which is more secure and scarce than bitcoin, and which has the endorsement of national sovereignty, deserves our attention. In recent years, more and more central banks have begun to actively participate in the research of legal digital currency. At the same time, for bitcoin, whether it can really become a global currency is closely related to the development of regulatory policies in various countries. Up to now, most countries still prohibit the circulation and trading of bitcoin. On this basis, we return to the question that investors are most concerned about: where is the price ceiling of bitcoin? Do you want to follow other commodities and asset classes? According to the report of Guosheng securities on January 4, 2021, bitcoin, as a rapidly growing asset, has not only the characteristics of bulk commodities (similar to gold), but also carries the hope of emerging technologies in blockchain (similar to Internet technology companies in the stock market). Therefore, bitcoin is likely to go out of the independent market of commodities and stocks. According to the report of Zhaowei team of Kaiyuan securities on January 23, bitcoin price fluctuation may increase in the short and medium term with the acceleration of global economy repair supported by vaccine and the expectation of mainstream central bank policy exit rising. In the long run, whether bitcoin can really become a global “value preserving currency” is closely related to the development of digital currency and the change of regulatory policies. Finance Association

Leave a Reply

Your email address will not be published. Required fields are marked *