Bitcoin: Boom or bust?
Bitcoin has been showing wonders of volatility over the past few months. The fact that the BTC reached the $ 50K mark and went further, turned the perception of the financial markets even among the most inveterate critics. Everyone is now watching the asset. But is it inevitable that what goes up must fall?
Bitcoin is getting more fans
After breaking a path of eleven years, reaching multiple highs, Bitcoin surpassed the $ 50,000 mark for the first time on February 16 this year, which was a watershed moment for many in the financial markets.
Henri Arslanian, head of PwC Global Crypto, said that the Bitcoin rally is driven by two main reasons.
- The first is the constant exit of institutional players, family offices, hedge funds, asset managers, he said.
- The second is FOMO, the fear of missing an opportunity.
“For comparison: just five years ago, in 2016, only 5 million people had an account on crypto exchanges. Last quarter, there were already more than 100 million people with an account on crypto exchanges. That’s not even counting all the people who can now buy Bitcoins and cryptocurrencies using technology platforms like PayPal or Square, ” Arslanyan said.
Student and financial blogger Lin Yun Heng first heard about Bitcoin in 2017, but a lack of knowledge kept the 22-year-old away from the crypto space.
“I just kept reading and reading about Bitcoin, but I didn’t have the courage to do it because I didn’t understand the fluctuations or volatility back then,” Lin said.
He made his first Bitcoin investment in August 2020. According to him, in five months, the value of his investments has doubled, and amounted to almost $6,000.
Zann Kwan, CEO and co-founder of Bitcoin Exchange, said the company is seeing a surge in new investors. According to her estimates, now more than half are new customers.
“Every 10 minutes, 6.25 PTSBTCis created. About 700 Bitcoins are mined every day. This will continue until 2140, when we will reach a maximum of 21 million Bitcoin. And one of the mechanisms is that every four years, the number of Bitcoins that are offered to miners every 10 minutes is halved, ” Arslanyan explained.
Despite its rarity and rapid growth, investing in Bitcoin still involves a lot of risks.
Kwan notes that one of the features of Bitcoin is the fluctuation of its price, and this is something that new investors can not get used to.
For such users, she has a piece of advice: “If you don’t want to actively trade the BTC, if you just want to buy it for yourself, then buy it and just don’t look at the price. And check it only once every few months, not every hour, because it can really drive you crazy.”
BTC will grow
According to one recent study in the United States, two-thirds of millennials consider Bitcoin a better means of saving than gold.
But unlike gold and fiat currencies, for many there are still questions about the usefulness of Bitcoin as a means of saving. And this is another risk that investors should keep in mind.
Steve Bryce, chief investment officer at Standard Chartered Wealth Management, said: “What is its value? How would you rate Bitcoin? It’s really hard. If we look at currencies or gold, there is a long history of factors that you can look at to evaluate them. But cryptocurrencies are quite new, it is much more difficult for us to determine their fundamental value, just like any other currency.
It really depends on people’s trust in this currency. And this can evaporate even from regular currencies. For cryptocurrencies, the risks are probably higher than for conventional currencies.”
But despite such uncertainty, investors like Lin are talking about the long-term outlook: “Apart from the scarcity, Bitcoin is extremely liquid. When I want to buy or sell, it’s very simple, and I don’t need to go to a bank or broker to do it.
My price forecast for BTC is about $100,000 per coin.”
Some, such as Arslanian, believe that Bitcoin could fluctuate between $ 50,000 and $100,000 by the end of the year, while others, such as Bryce, believe that the price could fall.
“Most likely, by the end of the year, I expect it to be lower than it is today, and possibly significantly lower”, Bryce said.