Investors are starting to believe in bitcoin again


Investors are starting to believe in bitcoin again

Bitcoin is booming. The price of one unit of the main cryptocurrency is currently trading at about $ 11,500. Bitcoin has grown by more than 60% in 2020.

Experts believe that this is largely due to the weakness of the US dollar. The U.S. currency has fallen in recent months on expectations that the Fed will keep interest rates around zero for years as a result of the financial turmoil from the Covid-19 pandemic..

«Now bitcoin – it is a safe depository of funds», – said James Putra, TradeStation Crypto Representative.

However, in current realities, security is a relative concept.. Virtual currency remains extremely volatile.

Putra acknowledged that concerns about hacker theft and collapse of the Bitcoin exchange rate could make the massive acceptance of cryptocurrency unacceptable for ordinary consumers and small investors..

Investors are starting to believe in bitcoin again

Therefore, some experts are not sure if bitcoin prices will continue to climb to their all-time highs at the end of 2017..

At some point, institutional investors (like hedge funds and other large wealth management companies) may cash out some of their bitcoin holdings to take advantage of the fact that Nick Cowan, CEO of GSX Group, named «obscene rally» since bitcoin hit a price bottom in March.

«There is a herd that is in love with bitcoin and continues to push up its value.. But will this trend be supported by everyone else??», – asks Cowan, noting that big players dumped bitcoin (along with many other assets) amid fears over the coronavirus pandemic earlier this year.

However, Cowan acknowledged that the uptrend is positive for crypto traders..

Investors are starting to believe in bitcoin again

This could mean that the rally is still well founded, especially given that recent moves by the Fed are expected to eventually lead to higher inflation.. The price increase in the country is already observed. The US government announced yesterday that wholesale prices rose much more than expected in July.

More inflation could weaken the dollar further, pushing bond yields down and giving Bitcoin another boost.

«Central banks have moved quickly to bolster the economy and some people expect it to recover quickly from the pandemic», – Cowan said.

Bitcoin’s jump reflects and rapid the rise of gold that recently reached its all-time high above 2 thousand dollars per ounce.

«Bitcoin’s rise is the same story as with gold. Investors are looking for alternatives to stocks, bonds and the dollar», – said Will Rind, CEO ETF manager GraniteShares. 

Putra noted that many older investors prefer gold to hedge the weakness of the US currency. At the same time, persons under 40 are more inclined towards bitcoin..

Investors are starting to believe in bitcoin again

Rind isn’t sure bitcoin will ever be as popular as gold given it’s lacking «universal appeal» due to volatility.

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