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Bitcoin in 2019: Best-Performing Asset, Even After Recent Price Downturn

October 6, 2019 at 4:42 AM | By Jit Sutradhar Feature

The Takeaway

  • Bitcoin prices have more than doubled in the year 2019, far outpacing the return of 31 percent of US technology stocks, Goldman Sachs considers the asset class year-to-date with better results.
  • Sizes yields could attract interest from major investors in the traditional financial markets performance hungry.
  • Executives say data firm Messari bitcoin prices, currently around $ 8,200, could assemble a new high in the remaining months of the year, exceeding the $ 12,902 level reached in June.

Investors would be hard pressed to name an asset class best performance so far in 2019 Bitcoin.

Gold? Up to 17 percent since December 31. Stocks? The Standard & Poor’s 500 Index returned 21 percent through September 30 bonds? The US Treasury bond 10 years is giving only 1.6 percent, near historic lows.

And Bitcoin? Prices for cryptocurrency ended the third quarter of about $ 8,308 each, according to data provider Messari, an increase of 114 percent in the year. Investors who bought in the last day of 2018 have doubled their money, and then some.

On Wall Street, one of the main criticisms of Bitcoin is that it was invented a decade (a baby standards Old World) by a computer programmer (or programmers, nobody really knows) without major real value underlying ago. It’s just something invented, as they say, with a volatile price only due to what the next buyer is willing to pay.

But with the slowdown in the global economy and trillions of dollars in government bonds from Europe and Japan to trade with negative yields, price increases bitcoin this year could attract conceivable a new wave of investors who previously did not even have to take a look .

There are already signs that are. Panther Capital, one of the oldest funds cryptocurrency recently scheduled an event in San Francisco for its existing investors offering cryptographer and digital currency pioneer Nick Szabo. As word trickled, a number of investors who had never touched the asset class contact invites the applicant company, said Paul Brodsky, a partner of Pantera.

“There’s a lot of drama around all this, there is a lot of energy, there is a lot of press,” said Brodsky. “We are receiving significant interest from institutional investors of all types.”

Fear of missing out

price increases of the year could attract large institutional investors such as pension funds and endowments, struggling to hit performance targets so that they can meet their obligations to retirees and other beneficiaries, according to company executives Investment centered cryptocurrency-KR1.

“Bitcoin has been around long enough now that people are more familiar with him,” said Keld van Schreven, director of the firm based in London, adding:

“Yep, it swings wildly, but they might know other people who have bitcoin, and say to themselves, ‘Hey, they’ve done pretty well this year.’ It’s always down to fear of missing out.”

In a report this week, analysts at the Wall Street firm Goldman Sachs classified shares information technology as the industry best performance year to date, with a yield of 31 percent, taking into account the difference profitability compared to other asset classes such as bonds and gold.

Bitcoin was not mentioned in the report, a reminder that the market is still in its infancy; Large Wall Street firms are not yet operating digital assets on a significant scale. But the year to date, the Bitcoin price increases are almost four times the level of those warmer-de-hot technology stocks.

Many investors noticed for the first time since 2017 Bitcoin prices rose more famous than 20 times, reaching a record high of $ 20.089 in December of that year. After a dismal 2018, Bitcoin is now 59 percent off that peak, according Messari, a provider based in New York, the market data encryption.

But the current price, the digital currency is still more than 10 times from its level at the start of the 2017 rally.

Store of value

One of the arguments long-term Bitcoin is that, unlike stocks and bonds, whose prices are often very sensitive to the decisions of central banks and governments, cryptocurrency is independent of the sovereign powers. Instead, it is governed by fixed policies that are encoded in the underlying network, and therefore difficult to change.

Under these rules, the supply of Bitcoin is capped at $ 21 million, so it will not be prone to inflation as coins developed markets such as the US dollar, the euro and the yen could be if their respective central banks resorted to print money as a way to stimulate their economies.

In fact, President Donald Trump, who is seeking reelection in 2020, has repeatedly called for rate cuts steeper interest of the Federal Reserve, while accusing China of artificially push down the value of its currency, the yuan, to gain an unfair advantage in international trade.

Many cryptocurrency defenders characterize as gold Bitcoin 2.0 – essentially a new, technologically improved and more portable the precious metal since ancient times seen as a reliable store of value.

“Bitcoin is slowly becoming digital gold, but is not there yet,” said Wang Qiao, product manager based in New York Messari.

No safe haven

For now, however, even in space professionals recognize that Bitcoin is highly speculative; many traders are betting only if the next series of ticks price is up or down.

“At the end of the day, bitcoin is still a very speculative asset,” says David Martin, chief investment officer of investment firm cryptocurrency Blockforce Capital in San Diego. Due to fluctuations in the spectacular prices in recent years, even on a daily basis, he says, “he is not a safe haven asset.”

Martin noted that the prices of Bitcoin have declined in recent months, to a maximum of 2019 around $ 12,900 on June 26, partly due to the loss of excitement in the industry about short-term prospects of a wave of money institutional entering the market.

Intercontinental Exchange, the owner of the New York Stock Exchange, debuted a new futures contract bitcoin last month that was designed to meet the needs of institutional investors. However, the volume of new contracts amounted to only $ 5 million in the week.

Compare this with the $ 26.5 billion corporate bonds changed hands each day in the US market during the third quarter, and it is clear institutions have yet to invest significantly in Bitcoin.

Vital signs

Some of the bitcoin internal indicators, however, reveal a healthy and growing market.

For example, Bitcoin is called hash rate, an indicator of the processing capacity has increased this year to some 90 exahashes per second (one exahash is a zillion hashes), about 40 exahashes at the beginning of the year.

And some industry executives believe prices could be bitcoin stage for a demonstration. Catalysts could include an escalating trade war with China Trump.

Wang says he took an informal survey among their co-workers, and the average forecast for year-end 2019 was $ 13,252 price.

“The number is fully as much as possible,” he said.

There are risks, too, of course, the possibility of a regulatory offense. “Obviously it could go much lower,” Wang said.

Bull image via Shutterstock

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