Bitcoin and speculators dream of a rapid increase in wealth




 For the first time in its short history, Bitcoin crossed the $ 30,000 barrier, as the currency gained nearly 9% on Saturday, topping $ 31,800, before dropping slightly below that price. The house price increased by 50% in December only, when it exceeded $ 20,000 for the first time, and the latest gains led to a rise in the value of bitcoin given the bitcoin price at the beginning of 2020, which rebounded sharply after the sharp crash in March that saw a 25% loss amid the Coronavirus epidemic. Managing partner and co-founder of "Nexo" in London, which considers itself the largest lender of cryptocurrencies in the world, that the currency "will be on its way to probably $ 50,000 in the first quarter of 2021."

In May, hedge fund giant Paul Tudor Jones said it owned 2% of its bitcoin portfolio. It ranked Bitcoin fourth on its list of the inflation hedge. In this month, Bitcoin will become more distinguished as the "precious" currency due to its rapid spread, and Bitcoin is considered "the first cryptocurrency that has integrity within digital currencies that will remain due to the limited supply of precious crypto." PayPal and Venmo have announced that they will allow the purchase of Bitcoins. In its digital wallets in addition to paying in bitcoin, although it is unlikely that most people will want to act in their cryptocurrencies with the steady rise in their prices. This news has led to a rise in the price of PayPal shares, along with the price of bitcoin.

*Is Bitcoin coming to be seen as a fairly safe store of wealth :

One of the main features of Bitcoin is that it is a store of value. This is especially important when the Fed is prioritizing lower rates over potential inflation for now, and the government is handing out stimulus checks. These actions may cause the dollar to depreciate over time. When that happens, as we saw in the 1970s, sticking to real assets can be a valuable investment strategy. Gold, other commodities, and real estate can maintain their value in times of weak currency.
* Offer is always limited:
Bitcoin is also unique because the offer is limited. In general, if the price of gold rises, gold miners are making more efforts to search for other quantities of the precious metal, and this can moderate the price increase over time. With bitcoin, the supply is limited regardless of the price. This is the trait Bitcoin speculators prefer when the price rises. There is no natural way to get hold of it other than finding a willing seller. Herein lies the extreme price fluctuations, along with other factors of course.
* Bitcoin and the risks surrounding scalping :
However, there is also a risk that Bitcoin is not a productive asset. This makes it difficult to assess and can explain large fluctuations in prices. This is unlike a company like Apple or Walmart where you can examine dividends and dividends to shareholders and determine a potential valuation. Even if the market does not agree with you, you can still receive profits from your investment while you wait for the market to appear. Bitcoin is just like gold, the value of an asset is not determined by the monetary return. However, this cuts both directions, critics could argue that the valuation is much lower, but there is also room for a higher valuation as well since there is no clear basis on which to value Bitcoin.

  


Sources:
Forbes
CNN BUSINESS
Bloomberg