Bitcoin’s 2020: an emerging investment outlet

2020 is bound to be a turbulent year for investors. Influenced by the spread of the new crown epidemic, geopolitical conflicts and loose monetary policy, bitcoin repeatedly set new record currency prices later this year, becoming a sudden emergence of investment outlets. More and more institutional investors and well-known enterprises choose to buy the asset to fight inflation and realize asset preservation. However, although bitcoin outperforms traditional assets such as gold and silver in the whole year, the crypto asset still needs to face the challenge of global government regulation in 2021, and the future of this asset will be full of uncertainty. This year’s cumulative increase was 275%, more than five times higher than the low in March. Driven by global fiscal and monetary policies, bitcoin ushered in the “second bull market” in 2017. During the outbreak of the epidemic in March, bitcoin once fell below $4000 due to the spread of market panic, among which the biggest drop was 38% on March 12. But then bitcoin was halved for the third time in history in May this year, with the block award reduced from 12.5 BTCs to 6.25 BTCs. According to the historical trend, every half reduction of bitcoin will bring about a boom in the cryptocurrency market. After the second half reduction in 2016, the price of bitcoin once approached $20000 in the second year. Sure enough, bitcoin went up all the way in the second half of this year, breaking through 20000 US dollars, setting a historical record of currency price. After standing at the $20000 mark, bitcoin climbed to $28000, close to $30000, and its market value exceeded $500 billion, surpassing visa (NYSE: V), a global financial platform. Throughout the year, bitcoin rose 275% in the year, five times higher than the low point of the epidemic, exceeding traditional assets such as gold, silver and crude oil. In addition, under the leadership of bitcoin, the top 10 cryptocurrencies with market value all saw a significant increase during the year. From the beginning of the year, Ethereum has risen by 450%, letcoin by 210% and ripobi by 18%. (bitcoin daily chart, source: investing. Com) why bitcoin has reached new heights and what is the driving force behind it? In view of bitcoin’s recent record breaking high, William, chief researcher of okex research, said that the direct reason was high net worth and the admission of institutional investors. “The rapid rise of bitcoin in recent years may be different from the speculation or speculation that people think of. Speculation and speculation do exist, but they are not the main reason.” Recently, a series of well-known institutions including Guggenheim, MassMutual life insurance company and other well-known institutions have announced their purchase of bitcoin. Since August, MicroStrategy, the world’s largest independent business intelligence company, has purchased a large number of bitcoin at a total price of more than $1 billion four times since August. According to the J.P. Morgan report, the trend toward investing in bitcoin is shifting from family financial institutions and wealthy investors to insurance companies and pension funds. Since September, institutional investors have bought 50 bitcoins, worth about $11.5 billion, according to the data. Although insurance funds and pension institutions cannot allocate bitcoin too much, it may still have a significant impact on it. In addition, due to the loose monetary policy that countries have to adopt in response to the epidemic, which has pushed up inflation expectations and weakened the attractiveness of sovereign currencies such as the US dollar, the US dollar index has depreciated by nearly 7% this year, making investors have to look for new safe haven assets. Jeffrey Halley, senior market analyst at OANDA Asia Pacific Pte, said, “the Fed’s more quantitative easing, higher government debt or steeper yield curve all bring certain risks to investors. Bitcoin is the best choice to hedge against the depreciation of the US dollar.” In addition, bitcoin has gradually been accepted by mainstream institutions, which objectively brings attention to the market. Since this year, online payment institutions paypal and square have announced the introduction of cryptocurrency payment services, allowing users to buy and sell bitcoin. Bubble or “digital gold”, where will bitcoin go next year? Although bitcoin’s rise is amazing, the debate about whether bitcoin is a bubble or “digital gold” has never stopped. Bitcoin bulls seem to be more active at the end of the year as bitcoin hits new highs. Garrick hileman, director of research at blockchain.com, predicts that as more and more large institutions are willing to hold bitcoin and boost its reserve currency status, the market value of bitcoin will climb to $1 trillion as soon as next year, and the price will be $54000. According to Guggenheim, based on the scarcity of bitcoin and its relative value relative to gold, the final value of bitcoin should be about $400000 according to fundamental analysis. Dan Tapiero, co-founder of gold bull international, agreed that it was only a matter of time before bitcoin prices soared to six figures, saying in an interview that bitcoin prices could range from $300000 to $500000, or 20 to 30 times the current level. However, there are also many voices in the market warning bitcoin risks. Rubik, a well-known economist who accurately predicted the 2008 subprime mortgage crisis, warned that the bitcoin bubble was about to burst. He pointed out that bitcoin can not even be regarded as an asset, but only has a speculative, self fulfilling rise, which is completely driven by market manipulation. Ray Dalio, founder of the bridge water fund, has also warned investors that bitcoin is likely to be declared illegal by the government. After a few weeks, however, Dario softened his stance. He later claimed that bitcoin, like other digital currencies, could serve as a kind of diversification over the past decade, similar to gold and other assets with limited supply. In addition, government regulatory risk is still the sword of Damocles hanging over bitcoin. Earlier, the U.S. Treasury Department proposed a new regulation on digital currency regulation, requiring some cryptocurrency dealers to provide information about their identities in order to curb the anonymous asset transfer by criminals using the new technology. In addition, Janet Yellen, who was nominated by Biden as the new US Treasury Secretary, has also warned investors in recent years that bitcoin is a “highly speculative asset” and “not a stable store of value.”.

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