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Original title: Bitcoin hits the $ 50,000 mark! Tesla’s 10 Billion Blessing, Bitcoin Reboots Dizzying Model! Be Alert To This Risk
Under Tesla’s “blessing”, Bitcoin rebooted its breakneck mode.
At 8 a.m. on February 9, 2021, Bitcoin broke through again, with the highest price of US $ 48,126, hitting the US $ 50,000 mark.
Bitcoin broke new highs, which is inseparable from recent comments made by the newly appointed world’s richest man and Tesla chairman Muskmeet. On January 29, after Musk changed his Twitter profile to “#bitcoin”, Bitcoin was up 18%. Subsequently, Musk successively “brought in goods” digital currency, first mentioned “Dogecoin” 6 times a day on February 4, and on February 8 Tesla invested a total of US $ 1.5 billion in BTC, and once again raised Bitcoin at 4.2 Ten thousand dollars high. It is precisely because Musk has a strong appeal in Europe and the United States, under his momentum, there are a lot of “fanatics” buying digital currency, which brings the rise of Bitcoin and Dogecoin.
Bitcoin currently has a market value of more than 865.6 billion US dollars, climbing to seventh place, beating Facebook and Tesla (the market value is now reported to be 807.829 million US dollars).
Institutional investors entered the market, volatility increased
William, a principal investigator at Ouyi’s OKEx Research Institute, told the China brokerage reporter that the direct cause of this round of bitcoin’s bull market comes from the influx of high-net-worth and institutional investors like Tesla. Since the second half of 2020, institutions such as the American insurance giant MassMutual Life Insurance Company and the business analysis company MicroStrategy have bought bits; Online payments giant PayPal and Singapore’s largest commercial bank DBS have also announced the launch of the cryptocurrency payment service. According to data from Bitcoin Treasuries, currently more than $ 6.9 billion in Bitcoin is in the hands of publicly traded companies. This brought the prosperity of the Bitcoin market.
The deep-rooted reason behind traditional institutions buying Bitcoin in bulk is the change in the global macroeconomic situation this year. On the one hand, due to the impact of the epidemic, the global economic recovery will slow down next year; on the other hand, the extremely lax monetary policy of the central bank has raised inflation expectations in the financial market. In an economic environment of high inflation and low growth, in order to avoid the loss of nominal capital and the need to pursue higher returns, the demand of investors to accumulate cash has naturally turned into a demand for gold and bitcoins.
The most obvious example is Musk’s Tesla Company’s latest disclosure document to the US SEC: “In January 2021, we updated our investment policy to give us greater flexibility to further decentralize and maximize” cash income. “,” As part of the policy, this policy has been formally approved by the Audit Committee of the Board of Directors. We may invest some of this cash in certain alternative reserve assets, including digital assets, gold bars, gold exchange-traded funds and other assets. “
Xu Tong, a senior analyst at the Huobi Research Institute, told a reporter from the China brokerage: This round of trading was primarily triggered by Tesla’s purchase of Bitcoin, causing market confidence in the market to increase. future of btc. FOMO (fear of missing something) sentiment was strong and many parties entered the market. The price is high, but a short-term pull will accumulate a large amount of profit, so be aware that short-term investors may appear after setting a new high and pay attention to risk control.
Xu Tong said that now many traditional industries plan to invest in BTC with a significant increase in interest, and the change in institutional investment preferences is very obvious. Digital assets are likely to be similar to gold. As assets on the company’s balance sheet, Bitcoin and gold have some similarities. For example, limited supply is considered a resistance to the existence of traditional asset bubbles. Compared to gold, Bitcoin is still a very young asset. It is not yet possible to conclude that it has formed a trend that can compete with gold. This round of Bitcoin currency bull market is caused by the release of water by the global central banks. Bitcoin as a safe haven asset has become a new option for institutional funds. As major institutions gradually inject funds, Bitcoin’s status as “digital gold” will become clearer. The volatility of the cryptocurrency market is also affected by many factors, and at present it is difficult to say whether it is more stable or more volatile.
When it comes to regulation, the regulatory outlook for Bitcoin is still uncertain. Whether Bitcoin can become widely popular and gain trust is also related to whether the regulatory environment is reasonable. In the long term, the trend for cryptocurrency to become legal and compliant. Further development of the city will be beneficial.
Bitcoin is not a safe-haven asset and you must be vigilant to adjust global liquidity
William said that it must be clearly recognized that Bitcoin is a high risk asset, not a safe haven asset; And as a special asset class, Bitcoin, unlike stocks or bonds, does not generate any predictable cash flow. for investors to make a profit is the rise in the price of Bitcoin, so speculative bubbles are more likely to form.
Therefore, when investing in Bitcoin, one must properly understand the investment positioning of Bitcoin. For novice investors, you can try investing some bitcoin to promote bitcoin understanding; But if you want to realize the so-called freedom of wealth when investing in bitcoin this is not realistic. At the same time, investors are not recommended to increase leverage to speculate on currencies. The price of Bitcoin fluctuates a lot. In market research, you will often find some investors speculating in currencies with a leverage of 10, 20 or even 100 times. Here comes a great investment risk.
“In view of the current conditions of the Bitcoin market, I suggest that you invest in Bitcoin carefully,” said William.
First of all, after the price of Bitcoin exceeded $ 20,000 in December of last year, a host of new investors started arriving. The most obvious thing is that, compared to November, the transaction volume of the Bitcoin market in December has increased significantly; Second, the rate of increase in the price of Bitcoin has started to increase significantly: Bitcoin has risen from $ 10,000 to $ 20,000. In January, it took half a month to go from $ 20,000 to $ 30,000, but it only took a week to go from $ 30,000 to $ 40,000. These signs indicate that the main investor force in the market may have undergone structural changes, and former institutional investors may turn to small and medium investors. The main strength of the market is different, which has a significant impact on market sentiment and price trends.
Second, the current market has started to diverge on future inflation expectations. The rationale for this bull market for Bitcoin is the market’s high inflation expectations going forward. However, with the launch of vaccines in several countries, including the fiscal stimulus measures brought by the new United States government, they will promote economic recovery. Under the double pressure of economic recovery expectations and high inflation expectations, the market speculates that the world’s major central banks will gradually withdraw from existing easing policies. In particular, in the minutes of the December 2020 Fed meeting announced on January 6, the first discussion took place to reduce the scale of bond purchases, which strengthened the market divergence on future monetary policy. Hence, the US Dollar Index has fluctuated in recent days and Bitcoin has skyrocketed. When monetary policy gradually shifts from relaxed to moderately tight, institutional investors are likely to sell Bitcoin.
