What is Bitcoin?
It is the single largest. Most widely accepted cryptocurrency in the world. It even has institutional investor backing.
How did we get here?
Please note, Bitcoin is a pure demand and supply game. Here, since the supply is limited at 21 Million Bitcoin out of which over 18.5 million is already mined and available in the market.
Since the supply is limited. As and when the demand grows. The Price of Bitcoin will increase.
How did demand grow?
Fed’s balance sheet, specifically the M2 (Money supply) was at 15 trillion during the beginning of 2020. The same is at over 19 trillion by 2021. An increase of 4 trillion in 12 months.
An increase of 25% in a span of 12 months. The highest in known history!
Due to the Fed’s excess printing, we saw sufficient money being funneled into various assets. Assets such as Stocks, commodities (gold & silver), and various cryptocurrencies. Bitcoin is one of them.
Thus, from a price of 4-5k $ per bitcoin during March 2020 to now at over 31k $ per bitcoin. In Indian Rupees that is at over Rs.23 lakhs, per bitcoin.
During covid, (especially in western countries) people were given a Stimulus cheque. This money was invested in Equities and crypto. Thus, the stock market and crypto are at an all-time high. It’s as simple as that.
Even the Indian market is at its all-time high thanks to FII’s (Foreign institutional investors). They were constant buyers whilst the DII’s (Domestic institutional investors) were selling.
Is this rally sustainable?
Do you remember what I said just before?
It’s a pure demand and supply game. Since supply is limited if demand increases then it will surely shoot up the price.
“Bitcoin node is in a Bull mode”
Look, Bitcoin has value as long as people believe in it and the way it looks. I don’t see any issues amongst the believers. They might be able to hold on to the price.
What if the government backlashes?
Now, that is an important question!
Where do you think the government gets its power?
The monetary system around which our economy is revolving, upon which it is sustaining is because of the government. Mainly the central bank’s ability to control the money supply.
Now, if you take this power away from the government. What do we have?
We have a free society that runs over a free market with decentralized money.
No! Government will never let that happen. If you believe so, then you are surely naive.
The government will not let Bitcoin or any other crypto become “money”. Maybe, it’ll be traded as a commodity. But, I don’t think we’ll have Bitcoin as a universal currency.
It’ll be good. But, it’s too good to be true.
So, Invest in Bitcoin only if you are 100% sure that it will be the next reserve currency toppling the US dollar.
And, for other speculative investors and traders out there. It is suggested to stay away. Especially if you do not believe or understand crypto technology. If at all you want to invest then see to it that your investment in Bitcoin or any such crypto is not more than 5% of your entire portfolio.
Disclaimer: All the information on this website is published in good faith and for general information purpose only.