Megaboom in cryptocurrency – how far is the Bitcoin euphoria going?


Crypto critic and star economist Nouriel Roubini can be changed and an analysis names a seemingly crazy target price: Everything to run on Bitcoin.

More than just shine and shine? Bitcoin’s price development currently only knows one direction – upwards.

Photo: Sacha Steinbach (Keystone)

Bitcoin has been on everyone’s lips again since autumn. The cryptocurrency also reached a new record thanks to the interest of institutional investors. The cryptocurrency is therefore likely to remain an issue for investors in the coming year.

The best-known cryptocurrency has had an eventful year despite, or perhaps because of, the corona pandemic. In the spring, the blockchain currency was briefly quoted below 5,000 US dollars in the wake of the global financial markets. By the time it was “halved” in May, the price was already back in the five-digit range. This halving of the remuneration for a calculated block, also known as “halving”, takes place periodically approximately every four years.

Rapidly towards 30,000 dollars

At the end of July, a unit then cost well over US $ 10,000. In mid-December, the Bitcoin finally marked a new all-time high and exceeded the mark of 20,000 US dollars, which had been missed several times. Then things happened in quick succession: after Christmas, the oldest and most important cyber motto was already heading for the 30,000 mark.

“The rally is currently being fueled by private investors who have stocked up on digital talers over the Christmas holidays because the traditional markets had closed their stock exchange gates,” says analyst Timo Emden from Emden Research. The new all-time high on Bitstamp is currently $ 28,264.

Huge demand

However, this already shows a first difference to the last all-time high at the turn of the year 2017/18. The price differences on the largest trading centers were significantly smaller than they were then. The second difference: this time, according to market observers, it was mainly institutional investors who drove the price up.

The demand from professional investors for cryptocurrencies as a supplement to stocks and currencies is “huge”, summarized Patrick Heusser from the Swiss cryptocurrency trader Crypto Broker.

Citibank has a target price of $ 300,000

In addition, larger investment banks are now increasingly positive towards Bitcoin and are increasingly recognizing the maturation of the crypto currency. For example, a technical analysis by Citibank with a price target of over 300,000 US dollars caused a sensation.

Even formerly harsh critics of the crypto currency felt compelled to reflect their opinion in view of the new strength of Bitcoin. Years ago, the economist Nouriel Roubini described Bitcoin as the “largest bubble in human history” and the “mother of all frauds”.

Roubini turns around

In an interview in November 2020, Roubini was tempted to say that the crypto currency “may be a partial store of value.” The reason for this he referred to the deflationary property created in the Bitcoin code, which limits the amount of Bitcoins.

This shows the approach that could play into the hands of Bitcoin beyond the next year. The large glut of money in the wake of the central banks’ Corona aid packages is not only driving long-time Bitcoin fans and central bank skeptics into alternative investments, but also entire companies that are meanwhile ready to invest their reserves in Bitcoins as part of a diversification strategy.

Firms invest their wealth in Bitcoin

In July, for example, the software company MicroStrategy caused a stir with the announcement that it would invest part of its cash reserves in alternative assets. By September, the company had bought $ 425 million worth of bitcoins.

The payment service Square of Twitter co-founder Jack Dorsey also invested $ 50 million of its cash reserves in Bitcoin. The announcement by the payment service provider PayPal that it would give its own customers access to larger crypto currencies also caused a stir. PayPal had previously separated from the Facebook Group’s Libra cryptocurrency project.

Pandemic as an accelerator

The British historian and economics professor Niall Ferguson even goes a step further and gives reasons that the competition between currencies could also shape the development of Bitcoin in the next few years.

Firstly, the pandemic accelerated the advance of digital applications: “What might have taken 10 years was achieved in 10 months,” wrote Ferguson in a widely spread opinion article.

Second, as a result of the pandemic, the risk of financial surveillance and financial fraud has increased significantly. “Both of these trends were good for Bitcoin,” the historian said.

According to Ferguson, Bitcoin has long since blossomed into a kind of “digital gold” that offers investors guaranteed scarcity and high mobility as well as low correlation with other asset classes.


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