(20 February 2021) The price of Bitcoin surged to more than $55,000 this week for the first time in history as large firms such as Tesla, PayPal, Mastercard, and BNY Mellon as well as major investment banks including JPMorgan, Goldman Sachs, and Morgan Stanley showed support for cryptocurrencies.
With increased demand from institutional investors and corporates instead of retail investors, Bitcoin's perception may be shifting to that of a more stable asset than it was a couple of years ago. On the other hand, some investors still consider bitcoin a speculative asset and think it may be one of the biggest market bubbles in history.
Moreover, there is a perception that Bitcoin is an uncorrelated safe haven asset similar to gold. It may seem that the bitcoin-gold competition has started as the largest gold ETF, SPDR Gold Trust, lost 20% in market capitalization since August 6, 2020, as gold prices decline while the Bitcoin market capitalization increased by 288% during the same period, increasing to $1 trillion.
However, bitcoin's extreme volatility is far from the volatility experienced by a safe-haven asset. Bitcoin's 10-year volatility is 10 times higher than that of gold which has historically provided low volatility relative to many other real and financial assets.
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(22 February 2021) During the last five months, the price of Bitcoin increased more than five times - from $10,000 to over $50,000 while the global cryptocurrency market capitalization topped $1.7 trillion. When it comes to traditional assets, such a rapid rise in the value of an asset typically indicates the emergence of a financial bubble. But, what about cryptocurrencies? Against the tsunami of cryptocurrencies' market capitalization increase, financial bubbles of the past look like small and mid-size waves, historically adding 40 to 440 percent to the asset value. The value of...
Bitcoin is one of the world's most popular digital currencies, meaning that it is exclusively created and held electronically. But, what do we actually know about digital currencies and the potential of these currencies to replace conventional money? Like conventional money, the major function of a digital currency is to serve as a means of payment, whether that is in exchange for goods or real currency, such as dollars and euros. In addition, similar to how a normal currency's exchange rate is set, the price for bitcoins - per the CoinDesk Bitcoin Price Index (XBP) - is based...
(29 April 2021) The volume of electricity consumed by bitcoin mining continues to grow globally, approaching the levels of energy consumption of some of the world's larger economies and bringing the environmental sustainability of the cryptocurrency into question. Tesla, which bought $1.5 billion worth of bitcoin in January, causing the price to surge to more than $55,000, became a target of bitcoin critics who say the step undermines the car company's environmental image. According to Digiconomist, a platform dedicated to exposing unintended consequences of digital trends, one...
Bitcoins, ethereum, and other cryptocurrencies, commonly known as "digital gold", are gaining exposure globally through various media outlets even though very few countries officially recognize cryptocurrency as legal currency. Official national-level regulatory positions relative to cryptocurrency may be separated into three main groups: totally against, legalized, and uncertain. The most interesting situation is uncertain because of the market basis at stake if governments turn away from digital gold. The majority of "uncertain" countries where no regulation is implemented do not...
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