On February 17, with institutional investors and large companies buying heavily, Bitcoin surpassed $50,000 for the first time, and the upward trend continued to attract small and medium investors from around the world, which together pushed the price of Bitcoin, the world’s largest cryptocurrency, to surpass A new milestone.
According to Coindesk data, as of February 18 in the European market, the price of Bitcoin was reported at US$51,697. Earlier, it hit a record high of US$52,457. So far this year it has risen by about 73%. Ether also hit a record high, with a cumulative increase of about 140% so far this year.
Bitcoin surged by 170% in the fourth quarter of 2020, reaching about US$29,000 at the end of the year, rising to US$40,000 after 7 trading days, and breaking US$50,000 after nearly six weeks and setting a new high. After it came out more than ten years ago, the price of Bitcoin was only a few cents for a few years.
Tesla announced that its investment of $1.5 billion in Bitcoin was the most obvious “catalyst” for the recent rise. The news made Bitcoin rise by 16% on February 8, the largest single day since the financial market turmoil caused by the new crown epidemic in March last year. Increase.
After MasterCard and the Bank of New York Mellon provided convenience for customers to use cryptocurrency, optimism rose. Morgan Stanley may include Bitcoin as a potential investment object.
Interestingly, Rick Rieder, head of global fixed income at BlackRock, the world’s largest asset management company, said that the company has begun investing in Bitcoin.
However, JPMorgan Chase analysts poured cold water on Bitcoin’s upward trend. The bank’s recent research report pointed out that Bitcoin’s breakthrough of the $50,000 mark and a record high is unsustainable unless the sharp price fluctuations quickly cool down.
The bank stated that the actual 3-month price volatility of Bitcoin was 87%, while the volatility of gold was 16%. The total value of all bitcoins in circulation has expanded from US$200 billion in September to US$900 billion. As the market value expands by US$700 billion, the total amount of funds flowing to the major trust and futures markets by institutional investors is only US$11 billion. The bank also believes that the limited supply of bitcoin has caused holders to charge a premium to bitcoin that has flowed into the market, and the influx of retail investors may have also magnified institutional capital flows.
Bitcoin may eventually reach $1 million and become a reserve currency
Anthony Pompliano, co-founder of virtual currency hedge fund Morgan Creek Digital Assets, stated that the price of Bitcoin may reach US$500,000 in 2030, and may eventually reach US$1 million, but no timetable is given.
He also stated that Bitcoin will eventually become a global reserve currency, and its market value will eventually far exceed gold.
Previously, Cathie Wood, the executive officer of ARK Investment Management, known as the “Bull Queen”, believed that the price of Bitcoin would rise to $500,000.
Wood said that Bitcoin has achieved a considerable position in the diversified investment portfolio. Judging from the daily return rate of various assets in the past 10 years, the allocation ratio of Bitcoin should be 2.55% (with minimum volatility) to 6.55%. (Maximize returns); if institutional investors allocate 2.55% of Bitcoin, the currency price is expected to increase by 200,000 US dollars. If the allocation ratio reaches 6.55%, the currency price will increase by 500,000 US dollars.
In addition, Sun Zhengyi, Chairman of SoftBank Group, said that Bitcoin will replace gold and increase its unit price to US$100,000 in 2025; Fitzpatrick, a top technical analyst at Citibank, believes that Bitcoin is expected to rise to US$318,000 in 2021. .
However, Nouriel Roubini, a professor of economics at New York University who accurately predicted the 2008 financial tsunami and known as the “Doctor of Doom”, recently bombarded Bitcoin again. He said that Bitcoin and other virtual currencies are not at all. A currency, more bluntly “even primitive people have a better monetary system than Bitcoin”.
Roubini said in an interview on Wednesday that, fundamentally, Bitcoin should not be regarded as currency, should not be a unit of account or an expandable method of payment, and cannot be used as a stable method of storing value. . He believes that it is a mistake to call them virtual currencies, and they are not even considered assets.
He said that the reason why Bitcoin has soared is due to the existence of a lot of manipulation, hype, deception, falsehood and insider trading, and emphasized that this is a bubble!
Peter Schiff, a well-known Bitcoin bearer and regarded as a “Wall Street prophet”, stated that Bitcoin will never become money. There are no assets behind it to support value. People who buy Bitcoin are ultimately “fools.”
Fed officials: Bitcoin does not damage the US dollar status
Although some companies have indicated that they intend to accept Bitcoin as a payment method, James Bullard, President of the St. Louis Federal Reserve Bank of the United States, believes that the increase in market interest in Bitcoin will not pose a serious threat to the US dollar as part of the world’s reserve currency. In the visible range, we see a global economy dominated by the US dollar. No matter whether the price of gold rises or falls, or the price of Bitcoin rises or falls, it will not really affect this.
He pointed out that before the American Civil War, it was common for banks to issue their own banknotes, using different banknotes for transactions with each other at different discounts, but people did not like this at all. He believes that the same happens with Bitcoin, and he believes that people do not want to use a non-uniform currency as a payment tool.
Asked whether virtual currencies pose a threat to the U.S. dollar, Brad said that competition between currencies is nothing new and has been going on for centuries. “This is a currency competition. Investors want a safe haven. They want a stable value and then use these currencies for investment.”
He also said that the euro and the yen are both strong currencies, but these will not replace the dollar. It is very difficult for a private currency that is more like gold to play this role, so he does not expect any changes in the future.
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.