At around 19:00 on December 27, Bitcoin continued to attack, breaking through $28,000 per coin, a 24-hour increase of 13%. At around 16:00 on the same day, Bitcoin hit $27,900 per coin, and the increase expanded to 12%.

At around 17:40 on December 17, Bitcoin broke through the $23,000 mark, and the news was also on the Weibo real-time rising hot list. At around 16:00 on the same day, data from the Bitcoin trading platform Bitstamp showed that the price of Bitcoin rose to $22,500, a record high. At around 23:20 on December 16, the Bitcoin transaction price.

Rising to around US$20,670, an intraday increase of 6.51%, which is the first time since 2017 to exceed US$20,000.

As a virtual currency, it is not uncommon for Bitcoin to “ride a roller coaster”. On November 27th, Bitcoin plummeted from a high of 18,913 US dollars, once fell to 16,354 US dollars, a decline of 10.2%, the roller coaster market fluctuated sharply.

Previously, Bitcoin had hit a record of $18,801 in December 2017. After the price of Bitcoin fell below $4,000 in March, the lowest price of the year, the price of Bitcoin has risen by more than 450%.

01

Is Bitcoin money?

The ultimate question about Bitcoin once again surfaced: “Is Bitcoin money?” Domestic experts said that for ordinary people, in addition to the digital currency issued by the central bank, do not touch other so-called virtual currencies.

Some practitioners talked about the issue of Bitcoin’s attributes when Bitcoin surged. Ethereum founder V God once tweeted that when it comes to cryptocurrency, it is usually best to ban the word “money” in the discussion and talk directly about its properties. “Is Bitcoin money?” This is not an economic issue, it is a signaling issue: “Can the owners of Bitcoin plant their flags on this mountain where there are already US dollars, euros and yuan?”

On December 11, the Wall Street Journal reported that MassMutual, one of the five largest life insurance companies in the United States, has purchased $100 million worth of Bitcoin for its general insurance account through the New York Digital Investment Group (NYDIG) .

According to statistics from Bitcoin Treasuries, currently, more than $6.9 billion in Bitcoin is held by listed companies, including US software giant MicroStrategy, asset management companies Grayscale and Galaxy Digital, and Jack Dorsey’s mobile payment platform Square.

A report by Grayscale Capital showed that 63% of Bitcoin investors surveyed stated that their decision to invest in Bitcoin was affected by the new crown pneumonia epidemic. Because Bitcoin seems to have some things in common with safe-haven assets, such as scarcity, not much correlation with traditional financial markets, and uncontrolled.

Mo Kaiwei, a financial commentator, analyzed that the reasons for the soaring price of Bitcoin currently appear to be mainly in three aspects:

First, the price of Bitcoin slipped to a trough after the epidemic. As the epidemic is further controlled globally, especially when the new crown vaccine is about to be launched on a large scale, the global economy may recover, and investor sentiment may also increase. Objectively, it stimulated a rebound in Bitcoin investment and forced the price of Bitcoin to rise.

Second, in the current global trend of low interest rates, according to the US CNBC website, Wall Street’s interest in digital assets is becoming more and more intense. Bitcoin has attracted professional investors. Many institutions hope to obtain excess returns through Bitcoin. As a bargaining chip for inflation hedge assets, this is also the hedging demand under the turmoil of the epidemic and the opening of global monetary policy to “release water”, and it is also an important driver of Bitcoin’s recent surge.

Third, S&P Dow Jones Indices Co., Ltd. will launch a cryptocurrency index in 2021. Bitcoin has reached a record high and will attract more financial institutions to enter the market. For example, in early December, MassMutual Life Insurance Company, which has a history of 169 years in the United States, purchased 100 million US dollars in Bitcoin. It can be seen that institutional users continue to enter the market through a similar gray compliance channel, which has contributed to the price of Bitcoin, which is a new trend that has promoted this round of Bitcoin price increases.

Moreover, if the global economy recovers slowly and the loose monetary policy does not shrink, global investment, especially institutional investors, buying Bitcoin hedging assets for risk prevention purposes will increase, and the price of Bitcoin will rise. Many investors may blindly follow the trend under the influence of the climax of investing in Bitcoin. At present, some people suggest that investors increase their investment position in Bitcoin from 10% to 20%, which is to double the amount of Bitcoin invested. This blind behavior is obviously irrational.

According to data, since November 6 this year, the Bitcoin Fear and Greed Index has remained above 80. This kind of investment behavior that goes to the two extremes is extremely dangerous and harmful.

02

Expert Tip: Invest with caution!

Mo Kaiwei, a financial commentator, said that historically, the phenomenon of sharp rises and sharp fluctuations in the price of Bitcoin has always existed, and many people have lost their money. The previous surge in Bitcoin has caused 14,686 investors to short Bitcoin futures around the world. Within 24 hours, about 607 million yuan of funds burst out, and wealth disappeared in an instant, and more people may fall into the abyss of investment because of long bitcoin futures.

Mo Kaiwei believes that as the world’s ability to control the epidemic has improved and the pace of economic recovery has accelerated, the global investment institutions and people’s expectations of inflation will inevitably decrease, and the amount of investment in Bitcoin will inevitably be reduced. There are also many problems in the price of Bitcoin. Certain factors, so if investors blindly praise the upward trend of bitcoin prices, it will also bring risks to investment.

In addition, Bitcoin is just a financial investment product in any case, not a legal digital currency. It is still floating in a gray area. With the development and launch of digital currencies in various countries around the world, especially the control or suppression of non-statutory digital currencies, the future will be non-statutory. The investment space of digital currency (Bitcoin) will be greatly compressed, and the ability to engage in inflation will also be greatly reduced.

In particular, once the governments of some countries impose strict restrictions on Bitcoin investment behavior, the price of Bitcoin may collapse. There is also a possibility that because Bitcoin has no legal identity, it has not been formally included in the formal financial supervision track, and it is impossible to completely eliminate some man-made manipulations and fraudulent behaviors by large investors in the process of Bitcoin transactions. This is also a risk that investors need to be alert to. .

Some experts do not recommend investing in virtual currencies. Zhang Xiaoyan, deputy dean of the Institute of Financial Technology of Tsinghua University, previously said in an interview that for ordinary people, apart from the digital currency issued by the central bank, do not touch other so-called virtual currencies.

It is worth noting that on December 1, Xinhua News Agency issued an article stating that the price of Bitcoin, a digital currency that has been silent for a long time, has been soaring recently. What is it that has injected a “booster” into the recent price of Bitcoin, and what risks and challenges will it reveal from it? In any case, blindly speculating is tantamount to “hype”, and a steady return to blockchain technology is the right way. People are gradually seeing the potential of blockchain technology, and technological progress and regulatory escort are going hand in hand. I believe that the advantages of blockchain consensus algorithms and decentralized governance mechanisms can be fully released in the future.