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One Bitcoin (BTC), currently worth 18,204 US dollars, is equivalent to 119,200 yuan at the current exchange rate. A virtual currency can buy a compact car for household use. Amber practitioners are still firmly bullish: “It is only a matter of time before it rises to $20,000.”
What is supporting the rise in the value of virtual currencies?
Amber practitioners and industry experts believe that the economic recession under the epidemic and the extremely loose monetary policy have caused institutional investors to buy Bitcoin one after another, which is the main reason for this round of Bitcoin’s rise.
So, how should investors view this wave of market? Respondents said that for institutional investors, it is currently possible to seek investment opportunities from market volatility, but for ordinary investors, “need to make investment planning according to their investment wishes and capabilities, and operate on an annual cycle. It is better, and the market outlook needs to be faced with caution and pay attention to investment risks.”
Bitcoin rose more than $18,000
Bitcoin rose like a rainbow, after breaking through $17,000, it rose again by more than $18,000. As of 20:30 on November 18th, Beijing time, the value of Bitcoin reached US$18,204, the first time since December 2017. In addition, GBTC funds, which focus on investing in Bitcoin, also rose sharply. The increase in October exceeded 40%, and the increase in November exceeded 31%.
As of now, Bitcoin has risen by more than 28% in November, and has increased from $7,269 to the highest of $18,488 during the year, which is a 154% increase. When the rise in the value of Bitcoin exceeded $18,000, the total market value of Bitcoin exceeded $330 billion, exceeding RMB 2.14 trillion, a record high.
Data shows that in 2013, Bitcoin rushed to $1,000, and then retreated to $150. In December 2017, when the price of Bitcoin rose to nearly $20,000, the total market value of Bitcoin reached $328.89 billion.
Kang Lvzhi, a senior analyst at Huobi Research Agency, analyzed the “International Finance” reporter and pointed out that the Bitcoin weekly line appeared three times before the “7 consecutive positives”: the first time was before the 2017 bull market started, and the second time was Before the start of the bull market in 2019, the third time was after the “312 market”, and the fourth time was now. “The weekly “7 Lianyang” shows that the market has a very strong consensus on the market direction, which is likely to be the basis for a larger wave of market in the future.”
Amber senior analyst Liu An (pseudonym) told the “International Finance” reporter that from the perspective of technical indicators, on the daily line, the MACD line (blue line in Figure 2) has crossed the signal line (red line in Figure 2) since early October. ), a buy signal is issued and the market enters an upward channel. Although the MACD line had a temptation to cross below the signal line around November 3, it eventually reversed and turned up, which subsequently brought the recent rise.
“At present, the MACD line is still above the signal line, but the distance above the zero line is too far, indicating that the market is in an overbought state. At present, the MACD line has flattened out and the market is expected to pull back in the near future. From the RSI indicator, the current The RSI has exceeded 75, which also shows that the market is in an overbought state, and there is a possibility of a callback in the future.” Liu An analysis pointed out.
Institutional admission “increase”?
Regarding the rising market of Bitcoin, Liu Feng, director of the Blockchain Technology and Application Research Center of the Institute of Artificial Intelligence and Change Management, Shanghai University of International Business and Economics, said in an interview with a reporter from the International Finance News, “The main reason is that the US dollar is unlimited QE. The release of water and the 5 billion U.S. dollars worth of Bitcoin from Grayscale Fund has driven the enthusiasm of the international Bitcoin market.”
Liu An pointed out that the direct cause of this bull market is that a large number of traditional institutions entered the Bitcoin market and brought a lot of buying funds. On the one hand, the total amount of Bitcoin has an upper limit, and the total amount that has been produced is about 18 million; on the other hand, Bitcoin holdings are inherently highly concentrated, and early entry miners and investors hold There are a lot of bitcoins. Therefore, the actual number of bitcoins in circulation in the market is not very large. The huge amount of funds brought by the entry of traditional institutions and the market enthusiasm that it drives can easily drive up the market price of bitcoins.
Kang Lüzhi also said that the main driving factor of this wave of market does not seem to be hot money and retail investors, but a certain sentiment of fear of missing out among institutions. At present, even the accumulation of gray fund holdings exceeds the daily output of Bitcoin. Bitcoin’s true deflation rate may be far greater than market expectations. Bitcoin chips in the secondary market continue to decrease, which means that there are fewer and fewer chips to determine the price of Bitcoin, and the difficulty of price rise may be lower than expected, and the future market growth may far exceed expectations.
Da Hongfei, CEO of Distribution Technology, analyzed to a reporter from the International Finance News that from a macro perspective, under the background of global monetary and fiscal easing expectations, global risk-off sentiment was suppressed and quickly turned to valuation restoration. For the global stock market to resonate with risky assets such as BTC. Data empirical evidence shows that Bitcoin is more biased towards a “procyclical” commodity. As the financial situation improves, the price of BTC has also rebounded from the March plunge to a level close to historical highs.
From the perspective of demand, Bitcoin’s popularity among professional investors, especially the increase in international acceptance, has led to a sudden increase in Bitcoin’s allocation. For example, the Grayscale (Grayscale) Bitcoin Trust in the United States, the number of Bitcoins it holds exceeded 500,000 this month, and the total digital currency asset management scale exceeded US$10 billion. There are also many listed companies that announced that their companies have configured Bitcoin, and the total number of purchases has reached 30,000. In the last year, almost no listed companies held Bitcoin.
“From the perspective of supply, Bitcoin’s halving in May 2020 means that compared with the past four years, the daily net increase in Bitcoin supply will be reduced by 900, and the annual decrease of 328,500 will be the annual’inflation rate’ of Bitcoin. Will drop to 1.8%, close to or even lower than the inflation level of many developed countries, which will be a positive factor for boosting confidence. Considering that the awareness and penetration of cryptocurrencies are still on the rise, the supply and demand situation It is expected to become more nervous.” Da Hongfei said.
Can I still “get in the car” now
Bitcoin’s fiery bull market has aroused investors’ interest again. Is now a good time to invest in Bitcoin?
“The timing of investment is difficult to define by good or bad. In 2013, Bitcoin surpassed 1,000 US dollars, and then the largest retracement reached 150 US dollars. From the perspective of the time, chasing high in the market may not be the same Good time. But from the current point of view, all prices at that time are good times. Investing in digital currency requires patience and a greater tolerance for drawdowns. Whether it is a good time or not depends on whether the investor is What kind of investment do you want to make?” Kang Lizhi said.
Liu Feng pointed out that in the short term, emotions are clearly close to the edge of explosive FOMO (fear of missing opportunities), which means that the opportunity for speculation has passed. For investors, you may wish to invest in a small amount, which is still worth investing in the long run. Investment is generally planned according to one’s investment willingness and ability, and it is better to operate on an annual cycle.
Liu An bluntly said that it is not suitable to buy bitcoin anymore, and the risk of buying at this time is relatively high. From the previous analysis of technical indicators, whether it is RSI or MACD, it indicates that the Bitcoin market has entered the overbought range and faces a greater probability of callback in the future. Similarly, from the perspective of the greed index, the current Bitcoin market greed index has reached 85, which is a relatively fanatical state. Even if Bitcoin will continue to rise in the next few weeks, it will ultimately not escape the iron law of the investment sentiment cycle-ushering in Fell.
Da Hongfei analysis pointed out that in the context of weak global real economic growth, the financial risk appetite actually caused by loose expectations has not risen significantly. When the valuation of traditional core assets is too high and the cost performance is gradually reduced, the attention of funds will be shifted to digital currencies with relatively high risk and return. Especially in the long-term view, the continuous easing of the legal currency world will only increase people’s awareness of encrypted digital currencies Faith.
“The value of Bitcoin comes from the consensus of the community, not from the pros and cons of currency attributes. The current price of Bitcoin cannot be a unit of measurement, but it is already an effective medium of exchange and store of value. Bitcoin may not need to be available in the future. All the properties of currency. Therefore, although Bitcoin has speculative bubbles from time to time due to its inelastic supply, it has huge development potential in general.” Da Hongfei said.
Da Hongfei added that according to PwC estimates, by 2025, total global asset management will reach US$145.4 trillion, an annual growth rate of 6.8%. It is assumed that 1% of these incremental capital will flow into encrypted assets, half of which will be If it flows to Bitcoin, each new Bitcoin will correspond to the inflow of 23,000, 66,000, 88,000, 130,000, 250,000, and 430,000 US dollars at the end of 2020 and 2025, respectively. The demand side potential is very large.