Bitcoin has aroused the greed of all those interested in the financial world. This same Thursday, 37,800 dollars (more than 30,800 euros) were paid, the highest price in its history, for this pioneering cryptocurrency whose market value exceeds 600,000 million dollars and which began 2020 trading at 7,184 dollars. Therefore, bitcoin – compared to the capitalization of the largest companies in the world – would occupy the ninth place, next to Tesla, Alibaba or Tencent and above the financial giant Berkshire, of the famous investor Warren Buffet. There is no bank in the world that is worth as much as the most famous cryptocurrency created in 2008 by a group of computer scientists under the pseudonym Satoshi Nakamoto.
In bitcoin, the concept of currency is mixed with the first large-scale application of blockchain technology (blockchain). A decentralized network that works without a governing body, such as a central bank, and that was offered as an alternative to traditional currencies in principle to facilitate secure payments outside of traditional channels.
In the protocol that the founders made on this cryptocurrency it is established that only 21 million bitcoins can be created with a time horizon until the year 2140. This limitation is, according to Javier Molina, an analyst at the eToro broker, one of the keys to the rise Meteoric that the cryptocurrency has experienced in the markets during 2020 and in the first bars of the recently released 2021. “So far 18.6 million bitcoins have been launched and since their creation about three million have been lost, with a maximum issuance horizon of 21 million. Unlike central banks with their expansive monetary policies to tackle the economic crisis and that they can issue what they want, in bitcoin the figure is already closed: it is a rare commodity ”.
And this is appreciated in the markets, where every day fewer investors are willing to sell this cryptocurrency and choose to keep it on their computer, on a simple pendrive. A lack of liquidity that explains one of the characteristics of bitcoin since its creation: its high volatility. Although in recent months it has behaved like a rocket, strong falls and stratospheric rises are frequent in its short history. In the past bitcoin fever, it reached $ 13,860 at the end of 2017, although it ended 2018 at $ 3,689. In general, its volatility triples that of the indices of the US Stock Exchanges. There is, therefore, a great risk of winning and also of losing. It is an investment only suitable for those who know the product and, also, as the experts indicate, to which to allocate a part of the portfolio that does not exceed 5% of the total.
In the complex 2020 for financial markets, bitcoin also offered a singular characteristic, as indicated by the professor of the Institute of Stock Market Studies, Daniel Díez: “Bitcoin could be the definitive asset to protect us in the scenario of a black swan [suceso imprevisto] such as the one caused by the arrival of covid-19, by maintaining a de-correlation with the main stock market indices, protecting those who had them in their portfolio, and this is a circumstance that has attracted more attention than ever, ”he explains.
And Javier Molina abounds in this idea, for whom bitcoin is the new gold of millennials. “It does not work as a payment currency, as it happens to gold and, also, like the precious metal, it is scarce. But it has advantages for the new generations compared to gold, since the cryptocurrency must not be deposited anywhere and you can have it on your computer. Thus, bitcoin now plays more of a role of store of value like gold, especially attractive to younger people. I think bitcoin is gold 2.0 ”, he concludes.
Investing in bitcoins in previous years had small investors as its great allies, but its capitalization has begun to attract institutional investors who do not want to miss the party. Dow Jones is already preparing indexes on the cryptocurrency and the CEO of BlackRock, Larry Fink, pointed out last December that bitcoin was beginning to catch his attention and that it could become a global market in which it would assume part of the role played until then for the gold.
Diego Morín, analyst at the broker IG Markets, explains the strong fluctuations in the cryptocurrency “due to the positioning of institutional investors, among them, investment banks that see the conquest of $ 50,000 feasible in the next two months.”
But not only financial companies show interest. “There has also emerged a trend started by the software firm MicroStrategy in the replacement of the treasury of large multinationals of dollars for bitcoins. This is something that a large number of large companies could repeat as there is already enough liquidity to make such operations a reality. This would have a great impact on the rise in the price of bitcoin ”, explains Professor Daniel Díez. Mode Global Holdings, Mass Mutual, Stone Ridge, or Ruffer Investment are also investing part of their treasury in bitcoins.
The forecasts are very promising in terms of the evolution of its price. Raúl López, head of Coinmotion in Spain, comments that the lower the amount of bitcoins created (scarcity), the higher their price in the market. Analysts consulted by Bloomberg suggest that it could reach $ 50,000. In this sense, the forecast of Citibank stands out, which places the value of this cryptocurrency at $ 318,000 in December 2021.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.