In just three weeks, the cryptocurrency leader Bitcoin has ended its decline at the beginning of the new year and is marching to a new peak.
Fortune 500 companies flock to cryptocurrencies, Bitcoin price hits a record high of nearly $50,000
As Fortune Global 500 companies have expressed their support for digital currencies, the price of Bitcoin hit a new high of nearly $50,000 on the past Sunday (February 14).
According to data from the industry website CoinDesk, Bitcoin, the world's largest cryptocurrency by market value, soared by more than 5% last Sunday afternoon, reaching an all-time high of $49,716.
However, this digital asset reversed its trend on Monday (February 15), falling 2.73% in the past 24 hours to around $47,729.
It is believed that the news that large companies such as Tesla, Mastercard, and BNY Mellon have begun to favor cryptocurrencies, has promoted Bitcoin's rally on Valentine's Day.
Tesla disclosed in a document last week that it purchased $1.5 billion worth of Bitcoin and said it would accept payment in this digital currency soon.
MasterCard said on Thursday that it will support certain cryptocurrencies later this year, and the Bank of New York Mellon (BNY Mellon) announced the next day that it will open custody services to digital assets.
The price of Bitcoin has more than tripled in 2020 and has risen by more than 60% since the beginning of this year. Many people say that this is because of increased demand from institutional investors and people's belief that Bitcoin is a means of maintaining value similar to gold. But bears worry that Bitcoin may be one of the biggest market bubbles in history.
Bitcoin, which has risen against the market, rose nearly three times throughout the year. Is "digital gold" approaching?
Affected by the epidemic, the blockade measures of various countries in the first and second quarters of 2020 caused a large-scale economic shutdown and a surge in unemployment. The GDP decline in the second quarter generally hit a historical extreme. Although the global economy generally experienced a rebound in the third quarter of 2020, as the epidemic repeated, some countries were forced to “foot the foot” again, and economic activity contracted again in the fourth quarter.
In March, the epidemic directly caused the U.S. stock market to fuse four times in ten days, unprecedented in history. In order to bail out the market, the Fed introduced extremely aggressive monetary policy and fiscal relief measures. At the end of March, although the US economy was still falling off a cliff, the US stock market began to rebound. Stimulated by large-scale bailout funds and related policies, U.S. stocks rose continuously. However, the sudden emergence of Bitcoin in 2020 has completely overshadowed the traditional financial market.
In addition to the cliff-like plunge in late February 2020, Bitcoin has experienced 5 rounds of rapid rise, especially since the bottom of the low of $3,850 on March 12 last year, the market has been advancing all the way. In the early morning of January 8, 2021, Bitcoin hit the $40,000 price mark, which is more than 9 times higher than last year's low of $3,850.
What happened to Bitcoin? Not only now, this is one of the fixed sentences in the investment circle in the past year. Because in the global capital market, Bitcoin has become the asset class with the highest increase since the beginning of last year, even surpassing the FAAMNG technology giant index.
As of December 28, 2020, the price of Bitcoin has risen from US$7,200 at the end of 2019 to US$27084, an increase of nearly three times. If calculated from the lowest price of Bitcoin at $3,783 at the beginning of the year, the increase was more than 6 times. In addition, the scale of stable currency issuance expanded 3.5 times to reach a record high of 27 billion US dollars.
The skyrocketing Bitcoin has led to a global cryptocurrency purchase boom. The Coingecko market shows that as of the 6th of this month, the current global cryptocurrency market value has exceeded 1.2 trillion U.S. dollars. The top three are Bitcoin, Ethereum, and TEDA. .
At the same time, the global stock market has been turbulent throughout the year under the influence of the epidemic. Against this background, Bitcoin may become "digital gold", and it has become an argument of many singers. Some market views believe that Bitcoin will Replace gold and become the world's new king of safe-haven assets.
Chris Wood, head of global equity strategy at Jefferies Group, a well-known Wall Street investment bank, stated at the end of last year that Bitcoin is continuing to rise and is a better store of value than gold. He believes that the previous investment portfolio accounted for 50% of the weight of physical gold investment , Will gradually decrease by 5 percentage points in the next few years. These funds will be used to invest in Bitcoin.
The "by-product" of the blockchain has become a favorite of speculators
It has only been more than ten years since the birth of the Bitcoin concept in 2008, and its price has soared at an unprecedented rate. The breakthrough of 40,000 US dollars this time seems to only continue its mission of a tool that has been destined to be manipulated by speculators since its birth, but the underlying principle that Bitcoin relies on-blockchain technology-is rarely affected by this. Speculators are concerned.
Satoshi Nakamoto's article "Bitcoin: A Peer-to-Peer Electronic Cash System"
According to existing information and the general knowledge of the industry, Bitcoin and blockchain were first published in 2008 by Satoshi Nakamoto in the article "Bitcoin: A Peer-to-Peer Electronic Cash System" (Bitcoin: A Peer-to-Peer Electronic Cash System). ) Explains two aspects of Bitcoin, one is the transaction mechanism, and the other is how Bitcoin itself is produced.
Schematic diagram of Bitcoin and blockchain principle
According to theory, the data blocks generated by using cryptographic methods are connected to each other to form a Blocks of Chain, which realizes that the information originally required to be concentrated in a central database is distributed to all users, thereby achieving decentralization. Under this system, each user owns part of the data, but the correct information provided by the user needs to be verified to obtain this part of the data, and this part of the data needs to be cross-checked with other users' data to realize the function of preventing tampering. In theory, there is no central node similar to traditional bookkeeping transactions (such as banks, lending institutions, etc.) in this mechanism. Only users themselves can know their own relevant bookkeeping information, and then realize the protection of users' personal information and hidden transactions.
Relying on blockchain technology, Bitcoin can be traded. As for Bitcoin itself, it is the product of data calculation and network structure. Essentially, Bitcoin relies on a specific algorithm to generate encrypted data through a large number of calculations. The current network structure and the limitations of encryption technology make Bitcoin possess two characteristics, one is scarcity and the other is difficult to fake. The two together lead to the inherent function of Bitcoin as a "general equivalent"—to measure the value of items—even if there is no corresponding actual value.
As a result, virtual currencies led by Bitcoin have become a favorite of speculators.
Post time: Feb-19-2021