Bitcoin is often described as the “digital gold” of the 21st century, but can it really be seen as a new safe haven against financial uncertainty and inflation? It is difficult to answer this question, but the actions of many major institutions and the sentiments of some well-known investment managers indicate that Bitcoin (BTC) is becoming more and more attractive as a means of dealing with these concerns.
Business analytics company MicroStrategy, after purchasing more than $1 billion in BTC after adopting cryptocurrency as the main reserve asset of the U.S. Treasury Department, has been bringing the company’s expenses to Bitcoin for the past six months. The company now owns about 70784 BTC.
MicroStrategy CEO Michael Saylor made it clear that this outstanding cryptocurrency is a store with a higher value than paper money and has been using its bitcoin since August 2020.
At the same time, in recent months, Grayscale Investments cancelled Bitcoin and firmly established itself as the world’s largest digital asset manager. According to the latest data released by the company, Grayscale’s Bitcoin holdings are an important contribution to its entire portfolio, with an estimated 648,000 BTC worth more than $20 billion.
Following in the footsteps of these Bitcoin pioneers, SkyBridge Capital launched its Bitcoin fund in December 2020. Skybridge was founded by American financier and former White House communications director Anthony Scaramucci, who expressed extremely optimistic views on the future of Bitcoin as a safe asset.
SkyBridge CEOs Brett Messing and Scaramucci described BTC as an increasingly attractive option for long-term investors seeking to avoid inflation in an opinion article published by CNN select. The couple said that financial institutions that strengthened regulation, improved infrastructure, and provided cryptocurrency exposure “have made Bitcoin investments as safe as owning bonds and commodities (such as gold), and gold is also used to balance investment portfolios.”
With BTC, Ether (ETH) and other cryptocurrencies reaching all-time highs in the past two months, Bitcoin and the broader cryptocurrency space have once again been pushed into mainstream consciousness. What remains is whether Bitcoin will truly become less volatile and fulfill the hopes of Scaramucci, Saylor and others who see cryptocurrencies as safe assets for the new era.
Change of mind
It is generally believed that the current cryptocurrency boom is essentially different from previous periods of high growth. Driven by company interests, cryptocurrency seems to have become a reputable investment for individuals and organizations.
Pavel Matveev, Wirex’s chief cryptocurrency payment leader, told Cointelegraph that although Bitcoin still maintains a bad reputation due to violent price fluctuations, Bitcoin’s view may change.
Matviv stated that the volatility of Bitcoin prices is still three times that of the Standard & Poor’s 500 Index, and recent price volatility is due to macroeconomic factors (such as the COVID-19 pandemic) and the government’s fiscal measures to deal with this situation promote:
“The most volatile factors for bitcoin prices are the limited supply at the institutional level and increased investor demand. However, quantitative easing measures and a low to negative interest rate environment have brought liquidity to historical levels. Of course, the company’s choice is to put a small amount of money. When the value of the U.S. dollar plummeted, there was no bullish Bitcoin in the treasury.”
For many people, an appropriate question is whether Bitcoin and other cryptocurrencies (such as ether) are now trusted long-term investments amid uncertain economic uncertainty. Matviv pointed out that institutions that are usually long-term owners make wise decisions when considering investing in BTC.
Bitcoin’s long-term positive appreciation record has always been a catalyst for institutional interest. Matveev also pointed out that some listed payment companies have pledged to include Bitcoin in their core activities, thereby increasing the credibility of BTC’s price performance. However, he admitted that this “will not change the high market volatility of Bitcoin in the short term”, but at least makes it a valuable investment.
Chris Marsalick, CEO of Crypto.com, the issuer of exchange cards and cryptocurrencies, pointed out to Cointelegraph that institutional investment’s impact on the cryptocurrency market, and suggested that their continued participation may strike a balance in space: “Investment in Bitcoin today vs. Different from before. 2017 was the main driver of retail trade, so it was affected by the most dramatic market changes.”