Editor's Note: This article comes fromChain reference (ID: lianneican), Author: Internal Reference Jun, reprinted by Odaily with authorization.
Editor's Note: This article comes from
Chain reference (ID: lianneican)
, Author: Internal Reference Jun, reprinted by Odaily with authorization.
Bitcoin has stood at the top of 28,000 US dollars, equivalent to 180,000 RMB. Over the past few days, Bitcoin has continued to hit new all-time highs. As of the end of December, the rate of return of Bitcoin this year has reached 270%. If nothing else, Bitcoin has become the asset with the best return on investment since the beginning of the year.
According to the CoinMarketCap data line, the market value of Bitcoin has exceeded 70% of the total cryptocurrency market value, setting a new high since March 2017.
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BTC becomes the 20th largest currency in the world
Bitcoin broke through $28,000, making it the 20th largest currency in the world. According to fiatmarketcap data, in terms of BTC, the "global common currency" bitcoin has a market value of 18,582,543 BTC, ranking 20th compared with global legal currencies, but comparable to the first and second RMB and US dollars. Compared with Bitcoin, the scale is still far behind.
At the same time, the market value of Bitcoin surpasses Visa, the world's largest financial institution. According to companiesmarketcap data, Bitcoin has surpassed Visa, which has a market value of US$499 billion, with a market value of US$499 billion, becoming the world's largest financial "company". Calling Bitcoin a "financial company" is somewhat odd, it's the only one listed as "Worldwide" on this list.
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Can BTC break through $30,000 before the end of the year
There are only three days left before the end of 2020. Many people are looking forward to whether Bitcoin can break through $30,000. Referring to the performance of Bitcoin in the recent period, this may be a high probability event.
According to many industry experts and practitioners, the recent surge of Bitcoin is mainly due to the trend of the global economy, the impact of the epidemic, and the sovereign digital currencies launched by various countries. At the same time, unlike the skyrocketing surge in 2017, this year's rise in Bitcoin was mainly driven by large institutional investors.
This round of rise may be due to the epidemic once again exacerbating the expectation of global economic recession. Global inflation is an unstoppable trend. Deflationary assets with anti-inflation properties are inherently scarce resources, and the demand for Bitcoin has further increased.
In 2020, we have experienced black swan events such as the "pandemic" and "negative oil prices" that have not been seen in a century. In order to cope with the economic recession brought about by the epidemic, countries have adopted quarterly loose monetary policies, and interest rates have been lowered repeatedly. At present, the European Central Bank has implemented Negative interest rate policy, while the federal benchmark interest rate in the United States is already close to zero. Likewise, the total assets of the Federal Reserve and the European Central Bank have nearly doubled since the beginning of this year and now stand at $7.38 trillion and €7 trillion, respectively.
On the one hand, due to the impact of the epidemic, the global economic recovery will slow down in the coming year; on the other hand, the central bank has launched an extremely loose monetary policy to push up inflation expectations in the financial market. In an economic environment with high inflation and low growth, in order to avoid the loss of nominal principal and pursue higher returns, investors' demand for hoarding cash has naturally evolved into a demand for gold and Bitcoin.
As a result, the market's expectations for bitcoin-compliant products have further increased, and many licensed investment institutions have established digital currency funds or applied to regulators to trade digital currencies, boosting the price of bitcoin.
On the whole, the superficial reason for the main Bitcoin skyrocketing is definitely caused by the shortage of supply, but why the shortage of supply is the key to the problem. This may be due to the further expansion of the Bitcoin production reduction effect.
There have been two halvings of Bitcoin in history, and each time the price of Bitcoin is halved, the price of Bitcoin will usher in a wave of bull market. On May 12, 2020, Bitcoin completed its third halving and started its fourth cycle. Intuition tells us that the price of Bitcoin will rise after the production cut.
Now let's look at the impact of Bitcoin's production reduction on the price in the long run, assuming that the supply and demand of Bitcoin grow at the same rate over time (the growth rate of demand is larger from actual observations, but this factor does not contribute to our analysis. cause a substantial impact), then it can be seen from the above figure that as time goes by, the supply and demand curves of bitcoin are moving to the right. When bitcoin is halved, the growth rate of supply slows down, causing the price of bitcoin to rise .
In the short term, Bitcoin has seen wild volatility. In the long run, due to the impact of production cuts and increasing demand, the price of Bitcoin shows an overall upward trend.
The halving of production is a key factor behind the rise in the price of Bitcoin.
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Will it crash like it did three years ago?
Will Bitcoin crash again like it did three years ago? the answer is negative.
