Bitcoin has shown a significant upward trend lately. In mathematical terms, Bitcoin has a higher return than stocks and gold.
All Bitcoin Hodlers will be happy right now, because the king of cryptocurrencies is rising and rising. The website Messari.io showed that Bitcoin performed better than real estate, gold and stocks over a four-year period.
Doesn’t Bitcoin (yet) correlate with other assets?
Apparently, Bitcoin has a low correlation with other assets. This opinion used to be widespread among analysts too, but was cast into doubt in March 2020 when it came to the acid test. Contrary to expectations, Bitcoin did not remain stable at the beginning of the corona crisis. Rather , the Bitcoin price fell like the stock market, albeit a little less deep. This shook the very foundations of the self-image of the Bitcoin disciples, who had viewed their asset as effective crisis prevention.
The reason for the price loss ultimately remains unclear. Experts believe that large investors see Bitcoin more as “shares” than “gold” and have therefore sold it. It is also possible that a liquidity crisis broke out with Corona. This could have resulted in investors having to monetize their assets. This then affected stocks as well as cryptocurrencies, especially Bitcoin.
Bitcoin is attractive
More and more professional investors have now discovered the at least low correlation. They are allocating more and more funds for Bitcoin, according to Messari, in order to maximize their long-term profits.
The big companies that have added Bitcoin to their portfolio include more than 20 financial institutions , such as Rothschild Investment and Boston Private Wealth.
Is there a threat of inflation?
Many people also see Bitcoin as one of the few ways out of the US dollar and the euro. Many large central banks are currently flooding the markets with money to keep the national economy going. Whether this “Modern Monetary Theory” will work remains to be seen. It seems questionable, however, that the basic rules of economics can be overridden. An increase in the money supply basically means inflation. Mind you, this does not mean that there will be (disastrous) hyperinflation.
Nevertheless, many investors seem concerned and want to keep their assets safe as a precaution. Real estate is at high prices, gold is often sold out, and stocks are currently expensive. It is only too understandable that some investors take a look at the technology of the future and recognize the potential of Bitcoin.