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The cause of Bitcoin is zooming and why it faces obstacles as an alternative asset

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Vandana Mrigwani Follow

INDIA

Feb, 24 2021

Feb, 24 2021

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The American billionaire hedge fund manager speaks that Bitcoin’s rise is remarkable and bubble-like. That’s what can frighten investors from as the cryptocurrency as a substitute store of value. 


Bitcoin is in the conversation of the global financial markets as the digital currency is sighted in a huge trading frenzy. With Tesla buying $1.5 billion of the cryptocurrencyBitcoin’s value has zoomed into the stratosphere. One Bitcoin is now valued at about $45,500, higher by 57% in 2021; even more than 25 ounces of gold. Just previously the pandemic hit in March last year, the digital currency was trading even under $5,000. 


Now a significant debate powerful globally is what is in stock for Bitcoin, and where lie the risks? For example, is the demand for a digital currency as a substitute asset class here to stay? Are digital currencies alternates for traditional asset classes like gold, and can one effortlessly and rapidly shift between assets? Or is this just a notional bubble fascinating global investors? 


No doubt, digital currency has originated a long way, and it is being realized more than just a substitute investment fad. Ray Dalio, the billionaire hedge fund manager of Bridgewater Connections, puts it concisely in a new client note: “It appears to me that Bitcoin has thrived in crossing the line from being an exceedingly speculative idea that could well not be about in short order to perhaps being around and having some worth in the future.” 


The Gold ‘Similarities'- Bitcoin is shaped in such a manner that there will be ‘only’ 21 million coins, which is more driving the story that the currency has alike characteristics to gold. 


People at Bridgewater Associates note that “Bitcoin offers steady and incomplete issuance that cannot be diminished by central bank printing”. 


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Vandana Mrigwani

CBW - External Analyst

INDIA

25 Feb 2021

great content

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