Speculative ASSET in different perspective

Speculators in financial markets seldom miss an opportunity to make money. This can be said for cryptocurrencies as well as anything else. Bitcoin features were introduced by Chicago board options exchange last month, CME group has launched his own features on December 18th which give a significant boost to this particular digital currency and its price rose up to more than 1500% which lead to all them high 20,000$. I must say this seem like a phenomenon to me, given the fact that excitement of investors and a long rally of buyers provided no additional fundamentals, only traditional speculative pump and dump strategy. After Bitcoin sore to its new highs, all the enthusiasts, and speculators began started to cool down. Followed by taking profits and selling off, which lead Bitcoin to plummet all of the sudden dropping down to 11,000$ and loosing more than 60% of its price giving up all the gains from several weeks back. The question is why would you invest in cryptocurrencies like Bitcoin or which one? Nowadays there are hundreds of them listed in coin market. Although there are no fundamentals involved to determine their price action.

  In general reality there are never so specific set of rules and guides available for financial instruments. In the financial markets bonds , shares and equities provide an investor a sense of security and reliability realitive to his investment. He is entitled to a series of payments in form of interests and cumulatively returns upon maturity of the asset, depending on the type of security or asset he is invested in.

  Unlike other financial assets Bitcoin does not bring neither any incentives nor cash returns to its owner. The only return comes when the price is high and you sell it with profits. There are no other sentiment or economic indicators involved that would determine it's value. It is very hard to predict whether the price of Bitcoin will go up or down. If the price is rising than, will it continue to go up? When its target price has been achieved by the market?. Negatively it is disappointing to say that, there are no price targets to achieve here. It can be worth $10 to $100,000 or any amount.

  Only one scenario that would be counted is that, the enthusiasm of the speculators. Let's just assume that every hedge fund, Pension Fund has 1% of its portfolio containing cryptocurrencies. What most people may define is ,the Bitcoin is a new digital gold, new safe haven or risk aversion. We can debate on that as long as we want. The stores of value i.e (Real GOLD) which supposed to keep its value intact but on the other hand so called virtual gold "Bitcoin" is found to be extremely volatile most of the time. It's generic code, an algorithm developed and coded by its creator satoshi nakamoto describes "only 21 million coins can be created ever". That distinguished Bitcoin from other Fiat currencies. If we assume that the central banks can some how take hold of all the cryptocurrencies, only the Fiat currencies they can create as much as they want not the Bitcoin. The Limited supply is mandatory for Bitcoin but not sufficient though limited supply and higher demand creates hikes or falls in prices. Hundreds of other cryptocurrencies exist in the market but the Bitcoin is a competition for everyone due to its Limitations and inadequate supply . It might replace the traditional paper currency someday but not sooner. No one would like the idea of holding the currency in their wallet which might go up 20% our plummet 40% with an hour. Main purpose of a currency is to get over the liabilities, pay the debts and buy goods and services for optimal satisfaction and fulfillment of basic needs necessities of human life. If you can imagine the situation "Bitcoin" is being used in every day life as a general currency and you have borrowed a loan from a bank our mortgage your house meanwhile the Bitcoin rose in its price. You will find yourself in a compromised position from which you won't be able to get out.

  In an extreme case if the traditional currencies like dollar, euro or british pound fail to support thier economies somehow or if there is hyper inflationary situation and local currency becomes unsuitable insufficient to mitigate. The Bitcoin can dominate the economies of the countries all around the world. But this is just a pipe dream, we can take this scenario furthermore to our imagination. Let's think that for a moment the technology on which cryptocurrency is depending upon (The distributed ledger so called the blockchain) becomes so advantageous and proves to be very useful in everyday life. It can be massively adopted worldwide , in that case Bitcoin can become a Pioneer in all the services. People would have no choice to buy Bitcoin to avail these services. But in reality the original focus of the people towards Bitcoin was the Liberty and its anonymity. A chance to use cryptocurrency anonymously in financial transactions which no one can detect (Illegal counter bands drugs etc). But it appears so that tge Bitcoin is not that anonymous anymore. Nowadays to buy Bitcoin you have to verify your account your email even though you have to use your bank card to buy it in the first place. All your personal details can be found on the blockchain along with the transaction history. Thats why the banks are not so concerned about the cryptocurrencies and blockchain yet instead of that they are building their own blockchains.

  The people of believe that cryptocurrencies would be next big thing and evolution in financial Institutions buying Bitcoin is similar to buying and options contract in the future market pictures of possibility like tossing again it might be has or tails it might pay of a word to the wise is like everyone else you should watch and learn carefully investors and speculators had played an intresting game , it was certainly a fun to ride the band wagon. Pilling up cryptocurrencies in their wallet. The real test will come later on when all of the investors , speculators and players need to get out of it again. A huge rally of sell of could be our next Big crash in Crypto market , Possibly the end of it.