Anbbit Insight | Bitcoin Has Become the Asset of the Frontier?
Tesla has made roughly $1 billion in paper profits from its investment into bitcoin. This happened in February.
According to the state, Tesla is on a trajectory to make more from its Bitcoin investments than profits from selling its EV car in all of 2020.
This is the very wired that Tesla is focused on the Electric vehicle but now starts to invest in Bitcoin, while some famous internet company like Xiaomi, Baidu and the other will be devoted to manufacturing the vehicle.
Someone will ask some questions like after Tesla who will be the next company to invest in Bitcoin? Or is bitcoin has become the frontier of assets?
For the first question, the answer is that some companies that have shown a strong objection to bitcoin will be the first band to try the new investment field.
Then for Bitcoin, In January 2021, the Bitcoin market cap reached an all-time high and had grown by over 400 billion U.S. dollars when compared to the summer months.
For several years, the Bitcoin market cap has already exceeded the combined capitalization of Visa and MasterCard.
While an increasing number of investors believe Bitcoin may be a successful hedge, as well as seen as a risky asset.
However, comparing with the soaring of Bitcoin, the performance of traditional major investments including bonds and stocks is far from satisfactory.
There will be a significant factor when discussing the yields of stock and bonds. When the interest rate changes, the economy, and the stock market, as well as the bond market, will change immediately.
Usually, the Federal Reserve adjusts the federal funds rate in order to control inflation. However, this issue can not be solved easily like this. Although the adjustment of the interest rate may alleviate the current state of affairs, the radical problem never changes.
In the past, the Federal Reserve has taken some measures to stimulate the economic increase, like to issue the dollars or change the interest rate, which makes the US dollar has been losing value.
Meanwhile, this is a totally different situation from the past. Due to the negative influence of the COVID19, US president Joe Biden announced a $1.9 billion aid package to stimulate the development of the economy.
The strategy may help many US citizen change the life, but also at the same time to increase concern on the US dollar. As this strategy facilitated, the fear from month and years will come to the investors, then they will select some assets to hedge the risk.
Besides them, someone who benefits from Joe Biden’s $1.9 billion aid package may also invest in Bitcoin, because now many whales have entered the market, which has shown that Bitcoin has become the promising and emerging asset class that worth investing in.
As we mentioned before, Tesla is never the only company to purchase Bitcoin. Several companies have jumped on board. Software Meitu, MicroStrategy, Square, and Stone Ridge shifting large parts of their treasury cash into bitcoin.
Even the traditional payment company Paypal would make a plan to become the intermediate to exchange the fiat currency and cryptocurrency.
However, Tesla and Paypal are just at the very start of marching the cryptocurrency market, because Bitcoin is become “too important to ignore”, so as to the price performance.
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