Why is bitcoin “soaring” after breaking through the $28000 barrier?

China News Agency, Beijing, December 27 (reporter Xia Bin) – since December 16, when it stood at $20000, bitcoin has started a “soaring” mode: in a short period of 11 days, the price of a bitcoin has broken through eight integer levels from 21000 to 28000 US dollars. According to coindesk data, at about 19:15 on the 27th, the highest price of bitcoin reached 28323 US dollars, with an overall market value of over 525 billion US dollars, about 3.4 trillion yuan, about 1.1 trillion yuan higher than Maotai, the “king of market value” of a shares. Why is bitcoin soaring? “This may be different from the speculation or speculation that people think of. Speculation and speculation do exist, but they are not the main reason.” William William, chief researcher of okex research, told China news agency that the direct reason for the sharp rise in bitcoin was high net worth and the admission of institutional investors. He pointed out that since the second half of this year, institutions such as American insurance giant MassMutual life insurance company and MicroStrategy, a business analysis company, have bought bitcoin; online payment giant paypal and Singapore’s large commercial bank DBS Bank have also announced that they will launch cryptocurrency payment services. According to bitcoin transactions, more than $6.9 billion of bitcoin is currently held by listed companies, which has led to a boom in the bitcoin market. Meng Xiaoni, CEO of bit deer, told China news agency that the objective reason for the rapid appreciation of bitcoin in recent years is that after the outbreak of the epidemic, global monetary policy has released liquidity on a large scale to stimulate the economy. This kind of environment of “opening sluice and releasing water” makes the global market in the period of monetary easing. While the liquidity of capital is greatly improved, the demand for risk aversion increases. Both of them produce the above results. “It’s not just bitcoin, it’s also a good year for the stock market.” She also pointed out that various financial experiments and product innovations around bitcoin have achieved good results this year. As the cornerstone of blockchain financial products, this track has attracted capital to continue to layout, showing a strong upward momentum on the whole. But don’t just stare at bitcoin’s “skyrocketing”, it has also fallen, and it has fallen miserably. According to the bitcoin price trend chart, from 2016 to today, bitcoin has fallen by 20% or more for 10 times, 30% for seven times, and more than 48% for four times, which means that bitcoin holdings may experience four price cuts in the past five years. “When the bitcoin price broke through the $20000 mark, a large number of investors began to pour into the cryptocurrency market, causing some cryptocurrency exchanges to stall or shut down.” William bluntly said that this indicates that the main investment force of the market may undergo structural changes, from institutional investors to small and medium-sized investors. The market’s enthusiasm is further amplified, which may lead to big fluctuations in bitcoin prices. We hope that market investors will remain rational and not increase leverage at will. Meng Xiaoni also mentioned that bitcoin price is volatile, and participants should stay away from leverage and contracts, avoid chasing up and killing down and frequent short-term trading. After all, only a few of them can really win the market. At the same time, we should pay attention to the security of asset custody. Now there are many exchanges, wallets and custody institutions, and the potential security risks of the platform can not be ignored. If you do not have the ability to deposit, you must choose a service platform with good credit and big brands. Investors are also being advised to stay away from bitcoin. Nouriel Roubini, an economics professor at New York University, said cryptocurrencies such as bitcoin should not appear in the portfolio of retail investors or institutional investors. It is not a currency, a unit of account, a means of payment, a stable store of value, or even an asset. The growth of bitcoin is speculative and self fulfilling, and it is driven by the manipulation of market tycoons. What will bitcoin do in the future? Bitcoin has gained more than 280% growth this year compared with the end of 2019. As for the trend of next year, Meng Xiaoni thinks that there are two possibilities for the trend of next year: first, the overall volatility will slow down due to the increasing volume of bitcoin; second, judging from the global economic development situation next year, it is unlikely that a global liquidity crisis similar to that in March this year will occur, and the extreme situation that the currency price falls below $4000 is less likely. “After the vaccine comes into the market and the epidemic situation is gradually alleviated, with the gradual recovery of the economy, monetary policy will gradually change from loose to moderately tight. At that time, institutional investors may sell bitcoin. ” William believes that before that, bitcoin will still maintain the main upward trend. Of course, as the price becomes higher and higher, the market volatility will gradually enlarge, and investors are not recommended to increase excessive leverage. Source: China Singapore network

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