January 22, 2021 |James Messi
Bitcoin’s Allure in Uncertain Times
As we leave behind the year of uncertainty that was 2020, we look on to what 2021 could bring us. Already in the first few weeks, we have been met with some major events – Bitcoin hitting $40,000, among them.
Why does Bitcoin still thrive despite the unrest that surrounds us? Why does nobody seem to agree on how the virus is transferred? Why do states not agree on what restrictions to put in place? And most importantly, why does nobody agree on which restrictions to adhere to?
These issues seem to divide us, but the rise of Bitcoin is not propped up by one set of views, but likely all competing sets of views concurrently – it all has to do with a shift of perspective that we are all facing. Let me try to explain
One of the biggest changes in perspective some people have been experiencing is the sudden lack of trust in one’s own currency.
Bitcoin – which was once seen as a crazy gamble – is now, ironically, the picture of a stable economy. The core features that brought it to its crazy highs in late 2020 have proven again and again to be something that people look for in a store of value.
Bitcoin’s ever-increasing price seems to indicate that an increasing number of people have more faith in the currency than ever before – but what is driving this confidence?
Bitcoin limits the amount of currency that can be in circulation overall. While Bitcoin can still be mined today, there is a limited amount that is in circulation. This significantly strengthens the currency compared to other, traditional currencies.. Bitcoin won’t be influenced by the failing politics or economy of one nation, it is only influenced by the users that own it.
As citizens of every nation face differing economic trials, Bitcoin looks all the more attractive to those who can get in on it. In a world where economists float around terms like inflation, deflation, economic recessions, and bear markets, it’s somewhat comforting to know that there is something that sits above all of this – not immune to its own highs and lows, but still somehow not responding to the typical stimuli that radically change other markets.
It is now easier than ever to put your money in Bitcoin. With exchanges like Robinhood allowing users to only buy partial stocks and coins, users that can’t afford entire coins are able to still put some money into the market and put their money where their beliefs are. While the addition of all these smaller investors doesn’t necessarily drive the price up, the increasing accessibility of Bitcoin only raises it’s notoriety, exponentially increasing its potential value.
These perks are universal to Bitcoin and bring Bitcoin owners together regardless of the seeming bipartisan divides across the globe.
To invest in Bitcoin is to bet against traditional fiat currencies. If history is any indication, that’s not a bad bet to take. Economies crumble in the blink of an eye, unforeseen events can instantly turn proverbial titans of the sustainable economy into the situation we currently see in Venezuela, Zimbabwe, Lebanon – where the price of their currency is literally less than that of some virtual video games.
Response to the Current Situation
Owning Bitcoin then comes down to a simple choice – do you trust the current economic systems that own the world or do you think they are passing just as many have before? Owning Bitcoin is something every smart individual that has a little extra in savings should trust in. But what about the increasing number of people who invest entirely in Bitcoin? Is it really so beneficial that completely forgoing diversification is actually an acceptable thought?
Unfortunately, none of these questions can be answered in full – yet. But the writing is on the wall – we will soon see if those who took the plunge will actually make it out with something worthwhile.
Don’t take my word for it though – check out what some of these top investors are saying and where their money is at
- Ruffer Investment Company, U.K. Based, invested roughly $740 million in Bitcoin – a significant percentage of their firm’s assets. Ruffer Investment Company reports that this move was a “protective move for portfolios.” Protective against what? The answer is clear – they are making the same observations made above.
- One River Asset Management invests over $600 million in Bitcoin and more into other cryptocurrencies. According to One River Digital Asset Management’s CEO, they are expecting to increase their crypto holdings to over $1 Billion in early 2021.
- Investor Christopher Wood, head of equity strategy at Jefferies investment firm has changed his model global portfolio to favor Bitcoin over gold even. This is particularly interesting because Wood specializes in U.S. Pension funds – which require consistency and reliability overall.
Not only that – but major improvements to the cryptocurrency market have been made. It is now easier and safer to enter into the crypto market and stake out your corner of the future then it has ever been before.
- Coinbase, U.S. based crypto exchange has begun filing with the U.S. Securities and Exchange Commission to go public. Once the form has been reviewed everything should happen very fast so keep an eye out. This means that Coinbase itself will be given much more attention than it already has – as one of the most prominent crypto exchanges on the market it will likely explode to heights we haven’t seen before, taking the crypto currencies that are traded on it with it.
- PayPal’s entrance into the crypto market has labeled it by many a “top payment stock” – meaning that not only will PayPal profit from their early entrance into the crypto exchange market but also they will encourage other partners to join in themselves. This could make it so that many different money-moving services will look to enter into the crypto currency market fast and in great numbers.
- Major businesses globally have all started to indicate that Bitcoin is safe and a good investment
– Banca Generali, Italian private bank, leading with over $14 million invested in crypto wallet provider Coino
– SBI Financial Services, connected to the well known Japanese tech conglomerate SBI Holdings, acquired the U.K. based cryptocurrency OTC desk B2C2
What’s this all mean?
Bitcoin’s strengths stem from it not being attached to any old traditional model that we’ve become accustomed to. No economic system is “too big” or “too secure” to fail – anyone who believes that will likely be sorry for it in the coming years – perhaps sooner rather than later.
Bitcoin shows not only the need for traditional currencies to adapt and compete with cryptocurrency, but to adjust how they operate in the greater scheme of the world at large.