More and more panic! Has Bitcoin really become "gold" in the shadow of the epidemic?

Author: Joyce

Source: Blockchain Outpost

Although the central bank issued an announcement on February 2 stating that it would maintain market stability during a special period of epidemic prevention and control, and would launch a 1.2 trillion yuan open market reverse repurchase operation to invest funds, A-shares were still almost unsuspecting on the first day of trading It opened with a daily limit, and the number of daily limit once exceeded 3,000. At the same time, Bitcoin China ’s Spring Festival holiday rose by 13%, and yesterday reached its highest price of nearly $ 9609.7 since March, which is like a "life winner".

"Bitcoin price rises linked to outbreaks"

"The recent rise in bitcoin can be attributed to continued economic uncertainty," said Shaun Djie, CEO of digital token company Digix. But coronavirus is clearly the biggest catalyst recently. "The rise in bitcoin prices is related to the outbreak."

The epidemic is still spreading, and market panic is spreading. As of 12 o'clock today, the number of confirmed patients across the country has reached 20,471, an increase of 3,235 from yesterday; the number of suspected people is 23,214, an increase of 5,072 from yesterday. Although some companies can work remotely, the epidemic has hit the physical industries that rely on crowds such as catering, tourism, education and training, and some experts predict that it cannot be repaired for at least six months. Especially for small and medium-sized enterprises, whether they can survive this period of time will be a question. Various sales activities of blockchain companies cannot be carried out, and mining machinery companies such as Bitmain and Jianan Yunzhi have also delayed production, delivery, and after-sales time.

"The continued rise in the price of bitcoin is related to the spread of coronavirus," said Nigel Green, chief executive of financial advisory firm deVere Group. He also said that as the new coronavirus epidemic continues to grow, the price of bitcoin will continue to rise. "The more cases found, the more countries affected, the greater the impact on traditional financial markets and the higher the price of Bitcoin."

State Street senior multi-asset strategist Marija Veitmane said that historically, when investors bet on the value of large government-backed currencies, Bitcoin, gold and other cryptocurrencies, and precious metals performed well. "Bitcoin and gold may continue to perform well as safe-haven investments."

Bitcoin's "digital gold" attributes are emerging

Bitcoin has been called "digital gold" for a long time. Regardless of the Sino-US trade friction, the geopolitical situation of the United States and Iran, or the two days before Brexit, the price of Bitcoin has risen to a certain extent. According to research by the Research Institute, Bitcoin and gold have a strong correlation in the event of a hotspot event. When economic fluctuations occur, both prices rise and have a hedging nature. At the same time, when national extreme events occur, Bitcoin is more popular than investors for avoiding risks.

However, the Research Institute also stated that as a hedging tool, the stability of Bitcoin cannot be compared with gold, and the development still needs to wait for mainstream social value recognition. OK Lianxuan, a senior researcher at OKEx, said that the current bitcoin market is too small to serve as a hedging tool for large funds in the traditional market. Secondly, bitcoin fluctuated too much, rising 3 times in the first half of 2019, and falling nearly 50% in the second half Such a large fluctuation makes no professional investment team use it as a hedging tool.

At the same time, according to the 2019 global investment report released by Grayscale, the world's top Bitcoin and cryptocurrency asset management company, on January 16, its management user size has increased by about 24% in 2019, and it has raised more than $ 600 million in the year. Of which 71% of assets come from institutional investment, which seems to herald the beginning of the real entry of institutional funds.

In December 2017, the Bitcoin Chicago Mercantile Exchange (CME) launched a cash-settled Bitcoin futures trading product. Tim McCourt, managing director and global head of alternative investment products at the CME Group, once stated: "Since its launch in December 2017, the total nominal transaction volume of CME Group Bitcoin futures has exceeded $ 100 billion." Intercontinental Exchange (ICE) also launched physical-settled bitcoin futures trading through its Bakkt platform last year. The rise of bitcoin futures trading has also helped to link bitcoin to larger mutual funds, hedge funds and pensions.

But we should also realize that the true large-scale entry of institutional investors does not seem to have arrived. Compared with other investment targets, although Bitcoin can bring higher benefits, it needs to bear more regulatory and security risks.

Upcoming Bitcoin halved

In May this year, the third halving of Bitcoin will be ushered in. Halving Bitcoin is an event that ensures its reasonable scarcity. Google trend data shows that the search volume for "half of Bitcoin" doubled in January, showing that everyone is paying attention to this major event affecting the Bitcoin market.

Earlier, the article "Half-temporary and half-temporary: Bitcoin price soared at least 120 times" analysis combined with the first two halvings of Bitcoin pointed out that before Bitcoin halved, the price of Bitcoin tended to rise faster, and then there would be a price correction. The pre-halving high before the pullback has been the highest pre-halving price point in Bitcoin history, but not enough to set a new all-time high. After every halving of Bitcoin, Bitcoin has successfully set a new high in price history. However, after reaching an all-time high, Bitcoin will enter a bear market after a bull market, and its price will fall by at least 80%.

Glassnode's official Twitter pointed out that entering 2020, the number of bitcoin stockpiles is increasing sharply. At present, at least more than 40% of bitcoin has not had a transaction transfer for 2 years. Many trading analysts are optimistic about the halving event, and we will not repeat it here. However, Bitcoin halving has a high probability of profit, but past performance does not guarantee future results, and investors must always be rational.