The price of Bitcoin has moved from US $ 7 thousand at the beginning of the year to US $ 11 thousand recently. Coinshares Head of Strategy, Meltem Demirors, explained the cause of the soaring Bitcoin price and whether it will continue to increase and the issue of volatility.
According to Meltem, investors are of the opinion that the currency has decreased in value due to quantitative easing (monetary policy by the central bank to increase the supply of money to the market).
Gold and silver and other safe haven assets experienced a similar rally as Bitcoin, because investors put their funds in assets that are considered safe.
Apart from that, there was a rally in early July 2020 in the crypto asset sector. Investors who invested in the sector and earned a large amount now take that money and deposit it in the form of Bitcoin.
Currently, there are many parties who develop financial products and services on networks such as Bitcoin and Ethereum.
The latest trend is the opportunity to deposit collateral and earn interest on these deposits. The interest earned is in the range of 7 to 35 percent, even up to 100 percent when it is just launched.
In the financial environment, where there is a 0 percent interest policy, investors are pursuing this opportunity which is known as yield farming.
The money earned from yield farming is then deposited into liquid assets, such as Bitcoin and Ether (ETH).
There are many applications of Bitcoin in the asset trading sector. Instead of using a banking system, investors can use a system based on open software. Crypto assets are trying to change the foundation of the financial system, which already needs to be replaced.
Demirors said that an allocation of 1 to 3 percent makes sense for investors, especially if those investors have stored gold.
Indeed, there is a digitalization trend in the investment sector, where companies such as Facebook, Amazon, Netflix and Google control 25 percent of the US capital market.
Although he did not provide a price prediction, Demirors said that his company would not build a business in the crypto sector if it did not see great potential in the future.
There are still challenges to be faced, and as an asset, Bitcoin investment is risky and very volatile.
Bitcoin does not have to be a medium of exchange for everyday expenses, but rather as a storage technology for assets. Due to the decreasing supply of Bitcoin each halving period, speculation on Bitcoin increases, so that it can become a profitable investment instrument.
