Soaring 360% in 6 months, Bitcoin investment returns have surpassed traditional assets such as stocks and gold

Earlier today, Bitcoin once again set a new record high, breaking through the US$56,000 mark during the intraday session, reaching a peak of US$56,563.72, bringing the total market value of Bitcoin to US$1 trillion. In the past six months, the price of Bitcoin has risen by approximately 360%.

In fact, according to the Bank of America’s February Global Fund Manager Survey, long Bitcoin transactions are considered one of the “most crowded” transactions in the world. And speculators, corporate treasurers and institutional investment who is considered to be contributing factors behind the volatility of Bitcoin.

In addition, Bitcoin has recently continued to soar because of this encryption currency appears towards the mainstream of the signs, including the US electric car maker Tesla (Tesla) to accept people with bitcoin as car payments, MasterCard and Bank of New York Mellon Bitcoin services will be provided.

Deutsche Bank (Deutsche Bank) research strategist Jim Reid mentioned in the report that Bitcoin has become so huge that it can even be said that it “generates its own demand” because companies and financial institutions have begun to dabble in the past few months. In the field, “Ironically, Bitcoin has been raising funds for so long and has gained more and more institutional support to turn itself into a reliable asset”.

The market value is calculated by multiplying the Bitcoin price by the issuance volume. Although it is not a perfect comparison, the Bitcoin market value of $1 trillion is higher than the value of a few stocks in the world. Tesla has a market value of about $700 billion, and Apple The market value exceeds 2 trillion US dollars.

Many investors and entrepreneurs who support Bitcoin have celebrated this milestone on the Internet, believing that Bitcoin will replace the characteristics of gold, but not everyone is optimistic about its prospects. Citadel Securities founder Ken Griffin said on Friday that he is very Currency is not interested, and researchers at JPMorgan have stated that Bitcoin’s rebound cannot be sustained forever.

JPMorgan Chase analysts said that Bitcoin’s current price has far exceeded its reasonable valuation. Bitcoin gradually enters the mainstream, only to increase its relevance to the business cycle assets, which means that it will follow the ups and downs of the economic situation and reduce its attractiveness as a diversified asset target.

Craig Erlam, senior market analyst at Oanda Europe, warned that “if the fundamentals of companies will become closely related to the trend of Bitcoin, then we will fall into a bubble without knowing it”.

Bitcoin’s return on investment has exceeded traditional assets

Proponents of cryptocurrencies are arguing with the doubters about the nature of this wave of gains: the former believes that Bitcoin is an asset that is sought after because of its ability to hedge against risks such as inflation, while the latter believes that this is a battle between currencies and Dangerous frenzy driven by fiscal stimulus.

Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney, said that the fear of missing out (FOMO) may be exerting an impact. “This effect is amplified during the loose money period, which to a certain extent boosts current buying interest.” But if Bitcoin “falls out of favor”, for example because of government regulation or investors turning to the next new thing, then Bitcoin may fall rapidly.

The price of Bitcoin broke through $56,000 in intraday trading. Since 2021, cryptocurrency indexes have outperformed stocks, gold, commodities, and bonds.

 

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This month, Tesla disclosed that it had invested US$1.5 billion in Bitcoin, and MicroStrategy increased the issuance of convertible bonds to US$900 million to purchase more Bitcoin.

Tesla CEO Musk tweeted on Friday to defend Tesla’s investment in Bitcoin. He said that Bitcoin is just a less stupid form of liquidity than cash, and Tesla’s actions are not direct. Reflect his views.

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