According to Zhitong finance and economics, bitcoin, which has a strong recent trend, appears a roller coaster market again. Bitcoin hit a record high of US $33649 on Monday (April 4), and then suddenly dived without warning, falling to US $28258, a decrease of 15%. Nikolaos panigirtzoglou, an analyst with Morgan Stanley, is currently betting that bitcoin could quadruple to $100000 in a year due to limited supply and large capital inflows, but he warned that such price levels would be unsustainable. First of all, bitcoin relies on the “mining” computer, which competes every 10 minutes to solve mathematical problems and verify transaction blocks. The first to solve the problem and settle the transaction will get a new bitcoin. The technology is designed to halve the number of new bitcoin growth every four years, aimed at curbing inflation. In May this year, bitcoin experienced a third “halving”, further limiting supply, which also opened a new upward trend for bitcoin. And Pantera capital, a hedge fund, points out that square (sq.us) cash app and PayPal (pypl. US) have already pocketed all the newly generated bitcoin, which further leads to a shortage of bitcoin. PayPal has recently purchased about 70% of the newly mined bitcoin, while cash app accounts for 40% of the total purchase, far more than all the newly mined bitcoin in this period. Separately, Phil Bonello, head of research at grayscale, a digital asset management firm, said the whale index hit an all-time high, which measures wallets or addresses holding at least 1000 bitcoins. Bonello said more than 2200 addresses were associated with large bitcoin holders, an increase of 37% from 1600 in 2018, suggesting that institutional investors have flooded in. For example, Druckenmiller, founder of Duquesne capital, a hedge fund, and Rick Rieder, BlackRock’s chief investment officer in global fixed assets, have also been enthusiastic about bitcoin recently. Panigirtzoglou also points out that the assets of the encryption fund giant gray scale bitcoin trust have increased from $2 billion in early December to $13.1 billion, while gold ETFs have outflow $7 billion in the same period, and bitcoin prices have tripled during this period. Panigirtzoglou said about $1 billion flowed into the fund every month, so while bitcoin is now overbought, the inflow is too large for traders to close their positions and any trades weaken prices. But the hidden threat is that a significant slowdown in inflows will increase the risk of bitcoin price correction, which may be similar to the correction in the second half of 2019. Bitcoin fell nearly 44% in the second half of the year from its peak in late June to $7158 at the end of the year. Despite a substantial correction, prices have nearly doubled throughout the year. Analysts pointed out that since 2016, bitcoin has fallen by 20% or more for 10 times, 30% or more for 7 times, and more than 48% for 4 times. Therefore, investors should not underestimate the risk of large fluctuations after the bitcoin price rises. It is worth noting that as the inflow of gold and bitcoin increases, their correlation coefficient with “risky assets” is changing. Xiaomo pointed out that since March 2020, millennials have bought a large number of bitcoin and US stocks, resulting in a strong positive correlation between bitcoin and the S & P 500 index. Plus bitcoin, which has been trading at 50% – 60% this year, is now more like a risky asset than a safe haven. The bank said that the change of correlation coefficient may be attributed to unprecedented fiscal stimulus this year, which has led to a sharp rise in the prices of financial assets. The factor determining the price fluctuation of these assets is no longer the risk or risk aversion attribute, but depends on whether the central banks of various countries will “put more water” on the macro level, and the bitcoin price may usher in a real take-off time.