Many consider cryptocurrency to be the new gold, but investment brokers are warning investors not to rush to buy into the market. Some governments, including both China and the United States, are doing what they can to stall interest and use of them. The caution by those who prefer traditional markets means your broker may not be telling you all the facts about investing in cryptocurrency.
The Value of Bitcoin
One thing brokers will not tell you is the incredible rise of Bitcoin’s value. Bitcoin, the leading and most recognizable cryptocurrency, has rallied in recent months. August ended well with the market reaching $150 billion. Its value jumped to $7,146, escalating 700 percent.
Bitcoin’s value is up an astounding 3,500 percent since it bottomed out in January, 2015. It tends to bounce around some and fell to $5,500 last week, but now is trading at more than $8,000.
The Future of Bitcoin
Brokers do not tell you about the growing use of Bitcoin. Most follow the opinion of Jamie Dimon, CEO of JP MorganChase, that the new currency is “a fraud” and is in a financial bubble, expected to burst at any moment.
However, other traditional investment banks are looking to establish a trading operation focusing on cryptocurrency. Goldman Sachs is one of the banking leaders investigating the prospect.
There are more stores also accepting Bitcoin, and some other cryptocurrencies, as payment for products and services. Those include the department store Target, food chain Subway, online retailer Overstock.com and Microsoft. Stores on the United States west coast particularly are open to accepting digital money for payment.
Standpoint Research analyst Ronnie Moas states more countries are accepting various digital monies with many even removing obstacles to encourage investment. Others like the United States are reluctant.
Governments want to continue to control monetary systems. They also don’t want people to be able to hide taxable gains, and digital currency makes watching gains more difficult.
One of the ways governments hinder digital currencies is they forbid Bitcoin or other cryptocurrency to be used in any governmental transactions, such as paying taxes, in many countries.
China took a harder line and banned both cryptocurrency trading on domestic exchanges and initial coin offerings, which is fundraising using digital cash, in September. The move caused Bitcoin to plunge. Some, including Mohamed El-Erian, Allianz chief economic adviser, said governments would not “allow the amount of adoption that is currently priced in” and believed Bitcoin was overvalued.
Yet, Moas raised Bitcoin’s target again with the new target at $14,000. He also set a 2022 target of $60,000. While that may seem aggressive, Moas bases his target on the idea there is $200 trillion of value-based assets globally, including stocks, bonds, gold and cash. He said there aren’t many solid investment options with value, so if only one half of 1 percent of global assets is put in Bitcoin, it’s value would jump to $1 trillion, Moas claims.
To be continued.
Get the latest in Asian Bitcoin news here at Coin News Asia.
About the Author
David Warren is the senior writer and lead researcher at HardStacks. He has been a financial engineer for over 30 years and has been investing in alternative assets since the Great Recession of 2008. He has a true passion for learning about economic cycles and educating others on how to protect and grow their wealth by investing in precious metals, real estate and cryptocurrencies.