Bitcoin Surge Continues as More Institutional Investors Turn to Digital Assets

FXOpen

The price of Bitcoin reached $57,000 over the weekend. The extent of the current bull run is so aggressive that earlier forecasts that Bitcoin will reach 200k and more in less than a year do not sound improbable anymore.

If that is going to be the case, it remains to be seen. What is important now is that the price of Bitcoin is disconnected completely from reality in the sense that the technology itself has no use and that the asset is purely speculative.

Why Do People Turn to Cryptocurrencies?

Distrust in the financial system appears to be the main reason. People are sick-entire of the same old “medicine” applied to broken economies (i.e., printing more money to solve for either excessive debt or economic recessions).

And they are right. Unfortunately, so are the policymakers. No one wished for two economic recessions less than ten years apart, but here we are. Moreover, the current one is far more impactful when compared to the 2008-2009 Great Financial Crisis for the simple reason that the health crisis affected the entire world and not just parts of it.

Therefore, people run from fiat currencies as they are perceived as unfair. After all, a close look at what happened in the past revealed that no fiat currency, anywhere in the world, has kept its value against gold – the benchmark for a store of value as it is the only form of money that exists for several thousands of years.

But a world based on Bitcoin poses more challenges than it appears at the first look. For instance, it would be far worse in terms of inequality among people because most of the coins are in the custody of a few addresses. To put things into perspective, just think that the top 0.01% of Bitcoin addresses hold more than twenty-two times the combined Bitcoins as all of the rest of the world combined. Hence, Bitcoin means nothing but inequality, and, as many voices recently claim, it means slavery to technology early investors.

Think of the DLT – the Distributed Ledger Technology. The blockchain is a type of DTL, but it is yet unclear as to what use the technology is for? Can anyone point to an industry or sector that the DTL, blockchain, or Bitcoin disrupted? The answer is no.

Therefore, the only thing that pushes the price of Bitcoin higher is its scarcity and popularity. Bitcoin hodlers (i.e., people that have held the cryptocurrency for a lot of time on the belief that its price will keep rising) stand firm, expecting the price to reach much higher levels.

Perhaps it does. Judging by the rate Bitcoin is adopted in institutional portfolios, we should not be surprised.

Yet, we are bound to see its use. Other than a speculative asset, there is nothing attached to it so far.

But isn’t it so with gold too?

FXOpen offers the world's most popular cryptocurrency CFDs*, including Bitcoin and Ethereum. Floating spreads, 1:2 leverage — at your service. Open your trading account now or learn more about crypto CFD trading with FXOpen.

*Important: At FXOpen UK, Cryptocurrency trading via CFDs is only available to our Professional clients. They are not available for trading by Retail clients. To find out more information about how this may affect you, please get in touch with our team.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Stay ahead of the market!

Subscribe now to our mailing list and receive the latest market news and insights delivered directly to your inbox.

forex

Crypto CFD Trading with FXOpen

Crypto CFD Trading with FXOpen

Experience ECN technology for deep liquidity and light-speed trade execution

  • Access over 40 markets 24/7
  • Trade with tight spreads and low commissions
  • Choose from 3 trading platforms: MT4, MT5, or TickTrader
Learn more

Latest articles

USD/CAD Consolidates
Forex Analysis

USD/CAD Consolidates

In the second half of April, the USD/CAD chart has shown a decline in volatility following significant spikes observed since February.

The Canadian dollar has stabilised against the US dollar within the 1.390–1.380 range over the

Why Coinbase (COIN) Shares Are Rising
Shares

Why Coinbase (COIN) Shares Are Rising

As the Coinbase (COIN) stock chart shows, trading closed yesterday above the $200 mark — for the first time since March.

Since the beginning of April, COIN's share price has risen by nearly 20%, while the S&P 500 index

Forex Analysis

USD/CHF Rebounds from Multi-Year Low

As the charts show, the USD/CHF exchange rate fell below 0.810 US dollars per franc earlier this week. The pair had not traded this low since the 2008 financial crisis. Demand for the Swiss franc as a safe-haven

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.