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Bitcoin is now one of the best-performing assets in the market, dwarfing well-known assets such as gold and the major U.S. stock indexes, the S&P500. Not in vain have well-known personalities, like the multi-billionaire Mike Novogratz, called Bitcoin the “digital gold” and attributed a large potential to the cryptocurrency.
Last week, Bitcoin rate rose sharply from $10,500 to $ 11,500. Within the last 7 days, Bitcoin has seen a price increase of 5.43%. The market capitalization has also increased from $193 billion to $208 billion.
This means that Bitcoin is performing significantly better than many other assets such as the Nasdaq, Gold, S&P500, or the US Dollar. From the beginning of the year until October 11, 2020, Bitcoin has increased by more than 58% and thus shows a significantly better performance than all the assets mentioned above.
The Nasdaq has also experienced strong performance and has risen by 34% since January 1 to date, gold by 27%, and the S&P500 by 7%. The US dollar, on the other hand, is treading water and is worth as much as it was at the beginning of the year. The following chart shows these developments in detail.
What is remarkable is the high volatility of Bitcoin, and the extreme price fluctuations associated with it. It is not unusual for Bitcoin to fall in price by up to $1,500 within a few hours due to a sell-off by whales. However, the chances of profit are just as high as the risk of loss.
Institutional investors like MicroStrategy and Grayscale buy huge amounts of BTC
MicroStrategy CEO Michael J. Saylor says that now is the perfect time to invest in Bitcoin. His company has purchased a total of 21,454 Bitcoins worth more than $250 million. This move is part of the company’s longer-term strategy to maximize shareholder returns. In addition, Bitcoin has strong deflationary characteristics, so MicroStrategy will use BTC as its reserve currency. Saylor comments:
“We believe that these and other factors together can have a significant devaluation effect on the long-term real value of fiduciary currencies and many other types of conventional assets, including many of the assets traditionally held as part of corporate treasury operations”.
In December 2017, Bitcoin reached its former historic all-time high of more than $20,000. At that time there was a gold-rush mood in the market and both large and small investors flocked to the market. Meanwhile, Ethereum, the second-largest cryptocurrency by market capitalization, also reached an all-time high of more than $1,300. Whether and when these figures will be reached again, remains to be seen. Nevertheless, new major investors could exert further buying pressure on the Bitcoin price.
Grayscale also sees great potential in Bitcoin and with the Bitcoin Trust, offers its customers an easy and secure way to enter Bitcoin. Grayscale owns a total of 2.1% of the currently available Bitcoin supply worth $4.9 billion. Most recently, Grayscale even launched a TV campaign on American television promoting Bitcoin as a promising investment and safe haven in times of crisis.
The company has also announced that it will continue to expand its portfolio and increase its inventories. In July of this year, Grayscale purchased 3 times more Bitcoins than the miners produced in the same time frame. Only yesterday Grayscale reported a record quarter. The Grayscale Bitcoin Trust saw an investment inflow of $719 million, which means it has absorbed 77% of all new Bitcoins. With this in mind, the outlook for Bitcoin could be even brighter in the coming months.
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