Should we invest in Bitcoin in 2021?

By parismexi | BigoMex Trading | 17 Nov 2021

2020 can be said to be the year when Bitcoin is truly popular.


In 2020, big hedge fund leaders including Stanley Druckenmiller and Paul Tudor Jones no longer have reservations about Bitcoin, and instead take action to buy it. In the same year, from Square in the mobile payment field, to the insurance company MassMutual, to the technology company MicroStrategy, etc., these companies have converted hundreds of millions of dollars in national debt into cryptocurrency.


Bitcoin's support camp is finally able to contend with its opponents. However, the price of Bitcoin, which has been silent for a long time (the price of Bitcoin has been almost in a sideways phase for a long time, and has not been able to break through 10,000 US dollars) is currently hovering between 30,000 and 40,000 US dollars. Retail investors should also invest in Bitcoin. Coins? What is the best way to invest in Bitcoin?


Bitcoin Support Pie


The Bitcoin bull market runs counter to the dollar bull market. The emergence of "money printer go brrr" on social media ("money printer go brrr". mocking the endless printing of money by the US government to stimulate the economy under the epidemic crisis) contains the most convincing investment philosophy of Bitcoin. In short, Bitcoin investors are fed up with the Federal Reserve. They claimed that in response to the economic crisis caused by the pandemic, unemployment, and potential corporate bankruptcy, the Fed's aggressive measures will cause the dollar to depreciate.


In the past, if underdogs were worried about currency depreciation, they would choose alternative investments to protect their assets. As a precious metal that has been tested for centuries, gold tends to become a safe-haven asset for the underdogs. The reason is that in addition to the limited range of options, gold has been very marketable since history. Bitcoin supporters insist that Bitcoin is actually "digital gold." Bitcoin and gold are both scarce resources. The difference is that gold needs to be mined, while the supply of Bitcoin is limited by its software code. Like other technology products, Bitcoin promises that over time, Bitcoin will continue to improve, and may even gradually become an effective payment method in the future.

As the Twitter and Square CEO Jack Dorsey said: "The Internet needs a native currency, and I think Bitcoin may be the best proof so far." If Bitcoin will become the "next gold", Even excluding recent price increases, Bitcoin still has a long way to go. JPMorgan Chase analysts pointed out in a recent research report that Bitcoin has become a competitor to gold. In the long run, the price of Bitcoin is expected to rise to $146,000.


Bitcoin opposition


Not everyone believes this statement. Euro Pacific Capital CEO and gold bull Peter Schiff retorted: “Basically, Bitcoin takes advantage of people’s stupidity and greed.” He believes that the underlying assets of Bitcoin are worthless except for speculation.


Michael Sonancin, chief executive of Grayscale Investments, a digital currency investment company, said that the market has shown that this is not the case. He pointed out that the price of Bitcoin has soared in 2020, "At the same time, gold investment products have also experienced the largest capital outflow in history."


Grayscale Investments encourages investors to allocate their gold reserves into Bitcoin. "Of course I don't believe this is a coincidence," Sonan Xin continued. He said: “Many investors have realized that Bitcoin is better than gold as a store of value or as an asset against inflation.”


Straight-cut digital golden topic


Buying through a reliable trading platform is the easiest way to get Bitcoin. Retail investors can buy Bitcoin directly from formal exchanges such as Coinbase. After that, it is similar to depositing in a bank and depositing the purchased bitcoins in an exchange. More sophisticated investors are not afraid of the encryption key (a string of alphanumeric characters) being tampered with, and can transfer their bitcoins from such third-party safes to personal digital wallets. For example, the British BlockChain company provides such digital wallet services .


It has also become more difficult to enjoy tax benefits for retirement savings accounts. In order to solve this problem, Grayscale sells shares of the Bitcoin "trust" it established in 2013 to first-class investors (institutions and large investors). After early owners dumped their shares in the secondary market through brokerages such as Vanguard Investment, Charles Schwab, Robinhood, and others, retail investors can buy shares in the Grayscale Bitcoin Trust (GBTC). Due to the inefficiency of workarounds such as Grayscale, the stock price often differs from the actual price of Bitcoin. Rene Steinberg, CEO and co-founder of Arca, a digital asset investment start-up, said that the premium “is a huge tax for immature investors.” Obtained by regulators in Bitcoin exchange-traded funds Before approval, retail investors must bear this cost.

In order to avoid stock price manipulation and insufficient market liquidity, the Bitcoin exchange-traded fund application submitted by investment management company VanEck, the Winklevoss brothers' Gemini exchange and other institutions has not yet been approved by the US Securities and Exchange Commission. But cryptocurrency supporters are optimistic about this. They believe that President Biden’s appointment of Gary Gensler as the chairman of the Securities and Exchange Commission may indicate that the Bitcoin exchange-traded fund is about to be approved. Gary Gensler is a former chairman of the US Commodity Futures Trading Commission and a professor at MIT, known for his proficient cryptocurrency.


In January of this year, the hedge fund SkyBridge Capital, known as the "fund of funds", launched a Bitcoin fund. CEO Brett Messing said: "If I were to bet, I think the Bitcoin Exchange Traded Foundation will be approved within 9 months to two years. It is best to buy Bitcoin before then."


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