Are cryptocurrencies a good investment?
- Crypto In A Nutshell
- Nov 1, 2020
- 3 min read
"In the context of the COVID-19 epidemic continuously raging in many countries around the world, the strong rise in cryptocurrencies has become a major profitable investment channel."
Leading in price increases
Cryptocurrencies, also known as digital currencies, have the strongest price increase according to the recent statistics of Bloomberg Galaxy Crypto. Accordingly, the increase in the price of virtual money in general from the beginning of 2020 to the last September 23 is about 66%, 3 times higher than the increase of gold and outstrips the stock, bonds and other commodities. Meanwhile, strong cryptocurrencies like Bitcoin stopped at $ 10,491, Ethereum at $ 341 ... Ethereum price skyrocketed. This is the digital currency that accounts for more than 30% of the Bloomberg Galaxy Crypto index. Currently (Nov, 02) each Ethereum is priced at 384.36 USD, up 296% from the beginning of the year (Jan, 01).
Observing on the website https://coinmarketcap.com, the virtual fairy market continues to increase in price.
For example, the most powerful virtual currency in the world today and also accounts for the largest proportion of value according to statistics on coinmarketcap.com is Bitcoin, on June 6, 2020 at a time it reached $ 7,542. However, as of November 02, 2020, Bitcoin was priced at $ 13,407, up about 77.76%. Meanwhile, Ethereum has grown even stronger, up to a few hundred percent since the beginning of 2020.
In general, the virtual currency market is following an uptrend from the beginning of 2020 until now after having had a decline at the end of 2019. Up to now (November, 02), the global crypto market cap on coinmarketcap.com is over $393.55B, of which Bitcoin accounts for 63% with a value of more than $ 248 billion.
A best reguge in COVID-19 pandemic
Marc Fleury - CEO of crypto asset management firm Two Prime said that the cryptocurrency market had been going very well during the Covid-19 crisis, partly because Bitcoin became a "refuge", like gold, when the risk increases. "A purely ethereal instrument performs well when the real economy is on pause" he said.
Besides, Fleury also indicated that Bitcoin was a hedge against risks. Additionally, Bloomberg has also previously highlighted the Bitcoin-gold correlation, saying that these two assets are now more correlated than ever since 2010. Investors have recently fled to hidden assets. safe during times of economic turmoil, including the pumping of fiat currencies in the market, due to recent economic stimulus.
According to a Bloomberg report, the coronavirus epidemic has fueled the maturity of Bitcoin. Based on volatility measurement results, Bitcoin is taking the lead over the stock market. The COVID-19 crisis has been a catalyst for the conversion of Bitcoin into a safe-haven asset like gold and will continue if the stock market remains weak.
Agreed with those ideas, MicroStrategy CEO Michael Saylor also showed (in an interview with Bloomberg) that Bitcoin was less risky than cash or gold.
Saylor believes that the US dollar will soon lose significant purchasing power and asset inflation will increase by more than 20%.
Before the COVID-19 pandemic, MicroStrategy had much of its capital, about $ 500 million, invested in short-term US Government Securities, a common strategy for a public company. But when the pandemic broke out and output started to fall, Saylor began to feel that MicroStrategy's investment was in "a $500 million melting ice cube."
After a 10% negative return on MicroStrategy's treasury, the company looked at other safe havens like gold and real estate but found Bitcoin a much more affordable investment due to its scarcity.
In August, MicroStrategy announced its new capital allocation investment strategy with the purchase of 21,454 Bitcoin - making it the first and largest independent business intelligence firm to invest a majority of its treasury on Bitcoin.
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