At the time of writing, Bitcoin was approaching a new high of $20,000 per Bitcoin. What has changed since this peak was last reached?
Covid19’s status has changed the way people do many things. Technology has been at the forefront of everyday life. Things that used to be done physically are now pushed into the virtual world: education, food in restaurants, entertainment, work and the purchase of many goods and services. The natural modification of this type of calendar is the use of cryptocurrencies. The what? It is an extension of the technology-driven world. They can also be used to compete with the existing financial system at potentially lower costs.
The last time Bitcoin reached an all-time high, many institutions distorted cryptocurrencies as a means of payment used by criminals for terrorism, money laundering and illicit drug sales. Currently, MasterCard and Visa link cryptocurrencies to their credit cards and now accept PayPal Bitcoin is used on their platform. Many governments talk about issuing cryptocurrency versions of their traditional currency. There was also a push by Facebook in collaboration with major banks and other institutions to issue a cryptocurrency called Libra that didn’t go far enough, but the intention existed. Cryptocurrencies are no longer criminals unless the above institutions carry out the crimes.
The key to any technology is widespread or collective adoption. The more people use something, the more demand it is for it to be used and the more important it is. With widespread adoption, systems that work in conjunction with the product are also the beginning of change. For example, see iPods, Microsoft Windows, Internet service providers and electric cars. With the new demand will come new industries and pig products again that were not very useful without the approval of the original product.
Weak traditional investments
Given the common scenario and the recession that is developing, investment in stocks and bonds becomes very expensive and carries higher risks, as the underlying economy is separated from the performance of these markets. The high level of debt makes real estate investments more risky than in the past, as well as fluctuating rental income and people’s ability to pay their mortgages. Cash is a safe haven, but increasing expectations for debt and inflation mean that cash is also a risk. The concept of diversification means that these investments must be maintained to some extent, but there is now a desire for an asset that complements these products. This new asset is cryptocurrencies. This product allows for excessive debt diversification, currency devaluation and high inflation.