Bitcoin prices have risen to 320000 and 67000 millionaires have been born. Can ordinary people buy them?

Since 2020, the value of bitcoin has soared as consistently as Tesla’s share price. But different from Tesla share price, bitcoin has experienced many sharp falls in the process of soaring due to its essence, and each slump means that a large number of people who have lost their positions will lose their money. After a sharp fall at the end of 2020, bitcoin has broken through in January and February of 2021. As of 9:00 p.m. on February 17, the price of bitcoin broke through the $50000 mark and once approached $51000. This means that a bitcoin can be sold for 320000 yuan, of which the profit can be imagined. According to some data, bitcoin’s annual growth rate will exceed 300% in 2020, and the rate of return on investment is far higher than that of major global asset classes, including spot gold. At the same time, the sharp rise in the value of bitcoin has also made many investors in the currency circle become the protagonists of the “myth of wealth creation”. According to data released by bitinfocharts, as many as 67000 people in the world hold more than $1 million bitcoin in December 2020. In the previous month, it was only 25000. Since bitcoin market can create nearly 70000 millionaires in a short time, can ordinary people buy it? In my opinion, before ordinary retail investors invest in bitcoin, it’s better to understand the mechanism of bitcoin and the reason why bitcoin prices have been soaring recently. Bitcoin is a kind of virtual currency, which can only be obtained in a specific way. Moreover, the number of bitcoin based on blockchain technology is limited. Until 2020, the value of bitcoin has been stable at around $5000 due to the impact of strengthened regulation in various countries. But after the public health emergency in 2020, the value of bitcoin began to soar. From the bottom logic point of view, it is because the balance between supply and demand in bitcoin market is seriously tilted, which leads to the soaring price of bitcoin. From the practical point of view, the sharp rise in the price of bitcoin is affected by the depreciation of the US dollar. The U.S. economy is in recession due to the impact of the new crown pneumonia epidemic, and the Federal Reserve releases more US dollars in order to slow down the economic recession. This led to the rapid depreciation of the US dollar. In order to reduce the asset losses caused by the depreciation of the US dollar, a number of financial institutions chose the normalized bitcoin as a hedge against inflation. With the entry of many large financial institutions, the bitcoin market has become more and more lively, and the price of bitcoin is becoming more and more uncontrolled. Although the current money circle is prosperous, once the dollar appreciation, large financial institutions have left, bitcoin is bound to fall sharply. Even the new US Treasury Secretary has pointed out that bitcoin is a “highly speculative asset”. Moreover, bitcoin has not been recognized as legal tender by any country. Therefore, the author does not recommend that ordinary people invest in bitcoin. (edited by DILIN / proofread by Ziyang / Zhiqiu)

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