Not only whales swim in the sea of ​​bitcoins, but also sharks

CONTENT

  • Experts note growing interest in bitcoin from Wall Street participants.

  • Fund managers are attracted by the volatility of bitcoin and its uncorrelation with traditional assets.

  • However, financial sharks should not forget about bitcoin whales..

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Cryptocurrencies are not only attracting whales, but also such Wall Street financial sharks as hedge funds. However, this market is still dominated by a small group of large players..

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Bitcoin does it again

The bitcoin rate began to jump again. In mid-March, the cryptocurrency fell in price by half, falling to the $ 4,000 region amid panic provoked by the Covid-19 pandemic. However, the other day, the BTC jumped above the $ 11,000 mark and continues to try to gain a foothold above it..

Bitcoin veterans have seen this switch from fear to greed more than once, and they know the consequences of such rushing can be painful. Suffice it to recall the speculative bitcoin rush in 2017, which first threw the currency to historic highs, and then collapsed by 80% in 12 months, led to the closure of a number of hedge funds and a prolonged crypto winter.

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Large leaps in the MTC exchange rate undermine its status as a trustworthy store of value or defensive asset. Warren Buffett, who is clearly not a fan of cryptocurrencies, once called bitcoin a “fear preserver”, believing that short-term pessimism pushes investors towards this asset..

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Will it be different this time?

However, Bloomberg analysts stubbornly prefer to compare bitcoin with gold. In an article published today, they write that a number of major Wall Street financial players are now showing increased interest in Bitcoin. They put it on par with gold as a hedge against an inflationary spiral or currency crisis amid unprecedented liquidity injections to combat the economic fallout of the pandemic around the world..

Recently, the editorial staff of BeInCrypto already reported an example of such a parallel growth of bitcoin and gold..

In May, renowned billionaire investor Paul Tudor Jones celebrated the “scarcity premium” offered by bitcoin and revealed that 1-2% of its assets are parked in cryptocurrency to protect against ubiquitous low interest rates. Institutional interest in investing in digital assets continues to grow. It looks like the topic of insurance against financial apocalypse and printing presses has become relevant.

Not only whales swim in the sea of ​​bitcoins, but also sharks

According to a July survey by Bank of America, 71% of fund managers think stocks are overvalued. In a market where almost everything grows, you need to be able to effectively diversify, and this is where investing in gold and bitcoin can make sense. On the one hand, BTC could repeat the dizzying rally of 2017. On the other hand, a number of experts argue that at this stage, bitcoin is weakly correlated with stocks. At the same time, its volatility increases its attractiveness in the eyes of risk-hungry hedge funds that make money precisely on sharp market surges..

Watch out for whales

However, it is in this unpredictability that bitcoin’s great danger lies. He has a tendency to behave contrary to investor expectations. The demand for military-technical cooperation remains speculative and emotional, and it is weakly tied to fundamental factors.

In addition, the volume of the circulating supply of bitcoin is decreasing not only algorithmically, but also artificially. According to the analytical company Chainalysis, about 20% of military-technical cooperation is considered “lost”, and about 60% is stored in savings. Wall Street sharks (as well as small fish like day traders) should remember that by plunging into bitcoin, they invade the territory of the “whales”, any action of which can set the entire market in motion..

At the same time, according to some Bloomberg analysts, the patience of whales may not be limitless, especially if bitcoin does not make tangible progress in practical, utilitarian application. In this case, whales can begin to gradually drain their stocks of military-technical cooperation, making a choice in favor of newer and more promising technologies..

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Not only whales swim in the sea of ​​bitcoins, but also sharks
Not only whales swim in the sea of ​​bitcoins, but also sharks

Swimming in the Ocean with Whale Sharks and Manta Rays!

Not only whales swim in the sea of ​​bitcoins, but also sharks
Not only whales swim in the sea of ​​bitcoins, but also sharks

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