Ho, ho, HO-DL! This is what Bitcoin believers should be thinking – a sign of the talent of digital asset investors to hold on to, Or HODL-ing, Bitcoins during ups and downs – during the particularly booming holiday trade for the world’s No. 1 digital currency.
Bitcoin prices were record-breaking over the Christmas holidays, as investors were looking to close the historic 2020 year of the world’s most prominent cryptocurrency, amid a global pandemic.
One Bitcoin coin briefly traded at a record high above $ 27,000, at the last pick Sunday afternoon on CoinDesk, after setting a historic peak of around $ 25,000 in the Christmas trading session. Bitcoin BTCUSD,
Trade never sleeps.
Bitcoin prices have gained more than 276% so far in 2020. By comparison, the DJIA,
It is up nearly 6% in 2020, and the S&P 500 SPX,
Gained nearly 15%, while the Nasdaq Composite Index,
It has increased nearly 43% annually so far.
Virtual currency fanatics point to the growing interest on the part of institutional investors and major companies, which now see the decentralized currency as a legitimate asset, or at least a potential hedge against valuations in other parts of the financial markets, including the US dollar.
In fact, bitcoin prices, which rose dramatically, after an epic decline three years ago, come at a time when the US dollar has been in a steady decline that some attribute to the belief that digital assets will someday replace fiat currencies such as dollars. Bitcoin is seen by many as a hedge against the depreciation of the dollar, which was part of its inception in 2009, in the wake of the economic carnage caused by the 2008 financial crisis.
The naysayers warn that Bitcoin is a tech innovation powered by thin air and is likely to be regulated at some point if it does not collapse under its deal.
However, that hasn’t stopped enthusiasts from declaring the current Bitcoin rally as just the beginning of a deeper shift in the financial markets.
It recently allowed users to run on its platform To buy Bitcoin, as well as other sister cryptocurrencies such as ethereum ETHUSD,
Bitcoin Cash BCHUSD,
And Litecoin LTCUSD,
The popular Cash app also allows users to buy and sell bitcoins.
On Saturday, Tim Draper, an investor in a startup who made his name in Silicon Valley for successful investments in companies like Skype and Twitter Inc. TWTR,
and some Notable failed investments in TheranosPredict, via tweet, that Bitcoin prices will grow 10 times from current levels by 2022 or 2023.
The trillions that governments and central banks have spent so far fighting the economic crisis caused by the COVID-19 virus are also seen as support for the rise of digital assets like Bitcoin.
One of the most exciting questions that have arisen in the financial markets is one of the portfolio modeling questions: Is Bitcoin suitable for a regular investor’s portfolio, and if so, in what proportion?
The truth is, no one really knows.
Many advisors suggest that only those who have the financial means to bear a significant loss should consider participating in digital assets. Until then, Bitcoin is seen as an asset that should make up a small fraction, between 1% to 5% of the total portfolio.
“ Although I am not sure what to do about this equivalent move in bitcoin (when talking to individuals, I was seeing that Bitcoin could have a small role in your wallet, although it should be treated as a very speculative rather than a currency) Peter Tchir, head of market strategy at Academy Securities, wrote in a research note over the weekend.
He added that the bitcoin move, as with many assets in the financial markets, could rise due to extremely low interest rates and fear of losing, or FOMO, as investors raise the price of an asset they were not among the first to adopt.
The researcher also said that individual investors, who use popular investing apps like Robinhood, could be behind Bitcoin’s rally, making gains similarly vulnerable to a big downturn as noted in 2017, when assets knocked off the door at only $ 20,000 to plummet to a low of around $ 20,000. $ 3,000 before starting the 36-month rally.
He wrote: “Or maybe people are seeing that“ Robinhood ”traders have moved their day trade, an option that has fueled speculation on Bitcoin (given the number of ads I get on“ nested ”sports bets, which shouldn’t be discounted).
Bitcoin is at its core a software tool that allows anyone to memorialize transactions on an immutable digital ledger. The so-called bitcoin miners solve complex puzzles or cryptocurrencies that require huge expenditures on computing power and help confirm transactions, and the miners in turn are rewarded with bitcoin for the effort.
This technology, in theory, prevents double spending and makes users anonymous, which is why critics argue that its primary use is money laundering and corruption.
At its inception, the value of a single bitcoin coin was worth a fraction of a cent, but its moves have been extremely difficult over the past 11 years, as demand has risen from both regular users and newcomers from companies and individuals, who made the case that a revolution in financial markets in reach.