Bitcoin “Carnival year”: soaring 600%, creating 70000 millionaires, can ordinary people buy it

[editor’s note] in 2020, in the year of gengzi, a rare public health event accelerated the evolution of the world pattern. The pattern of global economy, trade, finance, science and technology, food and so on had a sharp differentiation, and the old and the new were replaced. The elephant, black swan and grey rhinoceros in the room were still old, lurking everywhere and facing many crises. At a time of turmoil, what choices will major economies make? Open or closed? Mutual exclusion or mutual trust? Cooperation or confrontation? Tencent News, together with golden 10 data, launched a series of “changes 2020” planning, to review the magic 2020, how the world changes. In 2020, the global economy will falter, but it will undoubtedly be a carnival year for the bitcoin investment circle. Prices have broken records, hit bottom and rebounded more than 600% in the year, creating nearly 70000 millionaires In 2020, bitcoin, with its rapid development, has captured the headlines of major investment news and ignited the enthusiasm of global blockchain developers. Where does bitcoin’s crazy rise come from? Can ordinary investors still get on the bus now? At the beginning of 2009, bitcoin was born, which is an encrypted digital currency based on blockchain technology. Since then, bitcoin has embarked on a magical journey. On May 22, 2010, a programmer named Laszlo hanyecz bought two pizzas for 10000 bitcoins. At that time, the value of 10000 bitcoins was about $41, each worth about $0.0041. In the next decade, bitcoin’s trend was like a roller coaster. In 2020, when the global economy was bleak, bitcoin as a whole was suppressed first and then rose, reaching the peak of innovation, and the myth of 2021 was still going on. From the point of time, according to the quotation of bitstamp platform: In mid March 2020, the price of bitcoin once dropped to $3850. On July 27, 2020, bitcoin stands at the $10000 mark. On December 16, 2020, bitcoin broke the $20000 mark for the first time. On January 2, 2021, bitcoin stood at $30000 for the first time in its history. On January 8, 2021, bitcoin reached a new high, breaking through the $40000 barrier, and then fell back. According to the peak offer of $42000 on January 8, 2021, hanyecz bought 10000 bitcoins for two pizzas about 10 years ago, with a market value of more than $400 million, which can be called a magic show. In terms of the growth rate, bitcoin will increase by more than 300% in 2020, rebounding by more than 600% from the low point in March. The rate of return on investment is far higher than that of major global asset classes. For example, spot gold will rise by more than 20% in 2020, and NASDAQ index will rise by more than 40%. With the price rising like a rainbow, the global total amount of bitcoin transactions has also reached an all-time high. According to messari, the monthly peak trading volume of bitcoin was $88.5 billion in 2017, compared with $114 billion in November 2020. With the rise of price and the increase of transaction volume, there are many myths about how to get rich overnight in bitcoin investment circle. According to bitinfocharts, in December 2020, more than 67000 people held bitcoin with a market value of more than $1 million, compared with 25000 in November. Speculative bubbles vs. hot assets: bitcoin’s rampage in 2020 is jaw dropping, attracting the attention of global capital markets. So what is driving bitcoin’s boom? Similar to the previous rising market, this round of rise is driven by speculation and short-term speculation, but the analysis points out that this round of rise is supported by strong real demand, which is mainly reflected in two aspects: first, the rise in demand for risk aversion. The new epidemic in 2020 will make the global economy suffer a great impact, GDP growth rate has the largest decline since the Second World War, international financial risk has risen sharply, and investors’ risk aversion has spread. During the outbreak, many governments had to adopt loose monetary policies, and the “money printing machine” was fully opened, which pushed up inflation expectations. The cumulative depreciation of the US dollar index in 2020 was close to 7%. Since its design, bitcoin has a supply ceiling and certain anti inflation ability, which makes bitcoin an excellent choice for investors to hedge against the depreciation of the US dollar. The second is the admission of high net worth and institutional investors. In addition to the past family financial institutions and wealthy investors, mainstream institutional players, such as insurance companies and pension funds, are also running in, according to the JPMorgan report. According to the data, from September to the end of December 2020, institutional investors have purchased 50 bitcoins, worth about $11.5 billion. Although the absolute amount of allocation is small, the acceptance of bitcoin by mainstream institutional investors is enough to send a positive signal to the market. So, since the rise of bitcoin is not a pure speculative bubble, and the myth of “getting rich overnight” does exist, can ordinary investors still get on the bus? In fact, looking back on the trend of bitcoin in the past, it is not uncommon to see the story of turning straight after the soaring all the way. For example, in December 2017, bitcoin prices hit an all-time high, standing at the $20000 level. However, the next month, bitcoin prices fell by more than 50%. Therefore, the investment risk of bitcoin can not be ignored. The new US Treasury Secretary, Yellen, has pointed out that bitcoin is a “highly speculative asset”. Analysts also warned that bitcoin’s market size is still too small to be manipulated; at the same time, countries around the world are likely to strengthen the supervision of cryptocurrency, and even declare bitcoin illegal. All these factors determine that bitcoin’s price fluctuation is inevitable. In short, although the rate of return on investment in the currency circle envies others, the opposite of “overnight wealth” is the “evaporation” of assets. Ordinary investors should be cautious and alert to the speculative risks of bitcoin. Wen | Qiu Rong | Tu | Rao Jianning / Lu Wenxiang | Chen Jiali

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