Bitcoin's speculative frenzy will never go away

Bitcoin's speculative craze will never go away

Since the beginning of the year, Bitcoin has experienced rapid growth. The price of each coin has gone up nearly 100%, approaching 500% in the last 12 months. At the time of writing, the prices range from $ 3,966 to $ 57,805. This kind of rush has stirred people's memories of the 1999-2000 American Internet bubble and even the speculative tulip boom in Amsterdam in 1637.While it is true that Bitcoin has no structural links to fiat government currencies, it has its advantages. In fact, events this time of year increase the chances of Bitcoin staying here.

Bitcoin was originally launched by the short-lived Satoshi Nakamoto, who was the author of the white book "Bitcoin: a Peer-to-Peer Electronic Money System", which was released in 2008. So far, it's unclear whether Satoshi Nakamoto is a person, a group of writers, or a person. . Initially, Bitcoin seemed almost an academic activity of a small part of the global cryptographers community. The first Bitcoin created in January 2009 was basically worthless.

However, it was clear from the start that Bitcoin has some valuable properties. First, and perhaps most importantly, their numbers are limited. When a "miner" creates a new block of code, Bitcoin is issued. Currently, there are around 18.6 million Bitcoin. When the total number reaches 21 million, Bitcoin production will stop, which will likely happen in 2140. This is because of the way the Bitcoin blockchain is configured. Every ten minutes, miners will find a new block by solving a cryptographic puzzle. In return, they will get a fixed prize, which will be halved periodically and the prize will be reduced to zero. The most recent halving took place in May 2020.

Compared to the increasing supply of fiat currency, Bitcoin is scarce. Therefore, it must play a good role in preserving value and providing protection against inflation and currency devaluation, which is one of the reasons why it is so popular in emerging markets like Nigeria, Vietnam and Turkey. Given the current situation in the United States, this is also important: in response to the economic challenges caused by the pandemic, major fiscal and monetary stimulus measures have been implemented. The Fed's balance sheet has doubled in the last year to around 7.5 trillion.

Second, Bitcoin is global and decentralized. It operates outside the traditional monetary system, which makes it difficult for a single government actor to influence it. Despite the risks of tighter regulation (especially in the US), Bitcoin's decentralized nature must protect it from changes in government policy. Third, although several digital wallets and cryptocurrency exchanges have been hacked, the use of complex encryption and Bitcoin's public and private ownership records make it relatively secure.

After a long period of integration, Bitcoin managed to break several important resistance levels in October.

These attributes have consolidated Bitcoin as a viable cryptocurrency. Looks like it stays here. This has led to an increase in institutional adoption, which has accelerated in the last twelve months for the following reasons.

First, more than 50% of Bitcoin transactions are carried out in US dollars. Most global players still consider the US dollar to be the most universal and frictionless currency, driving the adoption of Bitcoin.

Second, it is easier for retail participants to trade and invest in Bitcoin. Initially, investors were required to create a digital wallet on an exchange like CoinBase and personally track their encryption code. Now, companies like PayPal and Robinhood offer Bitcoin transactions on their platforms. In the future, brokerage firms and other large financial institutions could also provide their customers with the ability to buy and sell Bitcoin. In this case, more and more new investors will have to start trading cryptocurrencies to consolidate their position as an effective financial tool.

Third, the American business community has started participating in the Bitcoin ecosystem. This helps legitimize Bitcoin and increases trust in the asset, which is the basis of our entire monetary system. There have been many examples recently: Mastercard recently announced that it will directly support selected cryptocurrencies on its Square network. In December 2020, it was stated that its Cash App customers could get bitcoins instead of US dollars from transactions, and Visa recently proposed, It will provide encryption software by 2021 to help banks and other financial institutions adopt digital currencies. Additionally, Bank of New York Mellon, (the world's largest custodian bank) announced in February that it would provide digital asset services,

This is strong support from Wall Street. The increase in institutional adoption, coupled with the relatively low correlation between Bitcoin and traditional asset classes, has shown me that it should be included in investors' portfolios in the future. Although I recommend, especially for individual investors, limit it to a relatively small portion of the total asset allocation.

This does not mean that the volatility will permanently affect the Bitcoin price. Withdrawals are very large, reaching or exceeding 20%, and some even as high as 80%. Given the number of supporters and new entrants, I don't think there will be an 80% shrinkage anytime soon, but I think the recent spike could shrink 20% to 30%. However, think of it as the opinion that if it rises 20%, Bitcoin price will return to around $ 45,000. Therefore, for those who wish to invest in Bitcoin, I recommend expanding it gradually to a digital currency.

So how do you get Bitcoin? Zb offers a variety of Bitcoin trading pairs. First you need to register for an account. Registration is fast and easy. However, you need to verify your identity before participating in a transaction. As the world's leading blockchain digital asset trading platform, (ZB) has created a rich and diverse product matrix, advanced trading systems and matching technology, complete fund deposit technology, and a seamless and smooth trading experience for users. One stop trading platform which can meet the various trading needs of different users.

It is a relatively complete virtual currency trading channel on ZB, with many large accounts, and its business includes over-the-counter trading, currency trading, and contract trading. This type of channel is chosen for trading with a high reputation, good credit support and brand influence, you can be sure of buying Bitcoin. ZB today, one of the reasons it is so respected by more and more people, is because it is so secure, and its criminal accounts are strictly confiscated. In the last 7 years, ZB has experienced no fund security incidents, and the level of transaction security exists within the industry. Among the best. Choose a channel that has a high reputation, good credit support, and brand influence to buy and sell, and you can buy Bitcoin with confidence.