On December 20, 2020, Twitter Enthusiasts Tesla Elon Musk, the unusual CEO, is brewing a bold action to shake the market.
On the same day, he posted a suggestive picture on his Twitter account to show that he was tempted by Bitcoin.
This immediately attracted a large number of Bitcoin fans. Among them, Michael Saylor, the founder and CEO of Microstrategy, the world's largest listed business intelligence company, was the first to bear the brunt. He sent several tweets suggesting that Musk change the company's account dollars into Bitcoin, and said that this would increase the company's market value by another 100 billion dollars.
Who would have thought that a "joke" like communication would come true.
On February 8, 2021, Tesla announced that it has used 1.5 billion dollars of its cash reserves to invest in Bitcoin, and the reservation of Tesla electric vehicles will soon accept digital currency payment.
Tesla's action caused a sensation in the cryptocurrency circle. Then, some institutions and companies followed Tesla's footsteps.
On February 10, Ned Segal, CFO of Twitter, said that the company would pay close attention to Bitcoin and would not rule out the possibility of paying wages with Bitcoin.
On February 11, according to foreign media reports, the oldest bank in the United States Bank of New York Mellon (BNY Mellon) also announced that it will provide its customers with storage and transfer services for digital currencies such as Bitcoin.
On February 13, Morgan Stanley said that it might invest in Bitcoin through its $150 billion investment department Counterpoint Global. Even the mayor of Miami, Francis Suarez, made a big announcement that he planned to let the city buy Bitcoin.
(Picture: Evobits Crypto Farm in Cluzhnapoka, Romania. Bitcoin is "mined" through energy intensive computer networks all over the world.) A series of actions pushed the price of Bitcoin to a new high, making its price rise to $58000. This is also the first time in history that the price of one Bitcoin has exceeded the price of one kilogram of gold.
The golden dream of the new era?
Since the beginning of 2021, Bitcoin has become the focus of attention of large companies and individuals. However, in the financial industry, the debate around Bitcoin is particularly noisy.
Supporters said that the cryptocurrency invented by the mysterious cryptologist "Nakamoto Cong" in 2008 is a complex, secure and decentralized digital asset completely beyond the control of the government, and its supply is restricted. According to the design of Bitcoin, the maximum number of Bitcoin is 21 million. This ensures that Bitcoin can withstand currency devaluation or despotism.
Many supporters also believe that Bitcoin will play an important role as a reserve currency in the broader digital asset ecosystem, just like gold played in previous times.
Christian Barreso, chief economist of Aurel BGC, a French investment company, believes that "Bitcoin is the gold of millennials".
Mark Cuban, a famous American billionaire and investor, also said that "gold is dead". It's time to watch Bitcoin.
In addition, some large financial institutions are also supporting Bitcoin.
Scott Minerd, the global chief investment officer of Guggenheim Partners, a large asset management institution on Wall Street, believes that, given the market value of all gold in the world, the final price of each Bitcoin may be as high as $400000.
Cathie Wood, the founder of Ark Investment Management, known as the "female Buffett", also made a judgment: the market value of Bitcoin has the potential to reach trillions of dollars.
Jesse Powell, CEO of Kraken Digital Cryptocurrency Exchange, said that the price of Bitcoin is expected to soar to $1 million in the next 10 years. He said: "The true believers will tell you that it (Bitcoin) will go all the way to the moon, Mars and eventually become the world currency."
At the same time, critics of Bitcoin scoff at the increasingly absurd price predictions that supporters have been showing off over the years. Critics believe that cryptocurrency is no different from "digital tulip" - it refers to the tulip mania in the Netherlands in the 17th century, which is also the earliest bubble economy event in the world.
(Note: In the middle of the 17th century, tulips were introduced from Turkey to Western Europe. At that time, the quantity was small and the price was high. Speculators were interested in the business opportunities, and began to hoard tulip bulbs and drive the price up. Under the propaganda of public opinion, people showed a pathological admiration and enthusiasm for tulips. In 1635, the upsurge of buying tulips spread to the national movement. However, on February 4, 1637, the tulip market suddenly collapsed, and within six weeks, the price fell by 90% on average. This indirectly led to the decline of the Netherlands, the European financial center at that time.)
(Figure: Bitcoin critics believe that cryptocurrency is no different from "digital tulip") Critics believe that Bitcoin is a quasi pyramid scheme that destroys the environment and has no practical use except to fund illegal activities. To them, Bitcoin is at best the tip of the iceberg of speculation triggered by low interest rates.
For these skeptics, the endorsement of various celebrities - for example, a recent tweet released by actress Lindsay Lohan shows that "Bitcoin flies to the moon", coupled with the emoji expression of rockets, will make people more convinced that Bitcoin and other cryptocurrencies are essentially empty.
(Picture: Lindsay Lohan) In their view, those who support Bitcoin are irresponsible promoters, rather than rigorous financial experts.
However, it is undeniable that investors' curiosity about Bitcoin is spreading. Analysts said that one of the biggest driving forces behind the recent increase in investors' interest in special currency is the uncertainty of the macroeconomic environment after the epidemic. People worry that the stimulus policies adopted by central banks to mitigate the economic losses caused by the epidemic will eventually lead to inflation.
Nowadays, even traditional "conservative" financial institutions are becoming more and more interested in Bitcoin. Even the world's leading investment banks Goldman Sachs Goldman Sachs Group Inc also reported recently that it was restarting its cryptocurrency trading counter.
Some supporters believe that a series of direct and indirect approvals released by mature financial institutions and companies will help push Bitcoin into the mainstream.
Chris Zuehlke is a partner of DRW, a large Chicago trading company, and the global head of Cumberland, the company's cryptocurrency division. He said: "One of the most interesting changes in the market is the tone of institutions when discussing cryptocurrency. Three years ago, when people talked about Bitcoin, they would ask, 'What is that?' Now, people begin to ask, 'How does Bitcoin trade?'"
Inigo Fraser Jenkins, an analyst at Bernstein, a Wall Street research institution, believes that people should take cryptocurrency seriously. Although he has previously said that cryptocurrencies such as Bitcoin have no role in institutional investors' portfolios.
Jenkins acknowledged that the number of customers involved in Bitcoin can be counted by one hand, but he believed that "more institutions will accept cryptocurrency in the future".
Last year, Ruffer, a traditional conservative investment group in Britain, invested 600 million dollars in Bitcoin, which attracted market attention. This year, Ruffe cashed in some bitcoin profits, selling a total of $650 million worth of bitcoin, but still holding nearly $900 million worth of bitcoin.
Duncan MacInnes, the fund manager of the group, said: "It is very likely that we will soon witness the birth of a new asset class."
He also said: "Bitcoin is quietly rising, gradually being adopted by mature institutions and becoming a legitimate alternative asset in the portfolio."
Is it too early to become mainstream?
McGinnis pointed out that the rapid maturity of the cryptocurrency industry was a factor that prompted him to change his mind.
He said that previously only a group of strange "brothers" and "geeks" focused on cryptocurrency, but now more and more well-known investment banks, hedge funds and consulting companies are joining them, and there are many professional cryptocurrency companies with formal supervision.
In his view, "cryptocurrency has matured."
Huaqi, one of the world's largest investment banks, also released a report this week, saying that Bitcoin is at the critical point of "mainstream acceptance" and "speculative implosion", and may one day become the preferred currency for international trade.
McGinnis said: "Bitcoin in the past and today are different from our expectation of future bitcoin. We believe that we are now at the beginning of financialization and institutions' adoption of such a long-term trend."
However, McGinnis also acknowledged that there is a risk of stricter regulation, control and even complete prohibition of cryptocurrency in the future. In this regard, he also reminded that, considering the rapid development of the industry, the time window for governments to take action and avoid catastrophic consequences is shrinking.
He pointed out: "The trend of institutional adoption is surging like a billow. If the government is determined to block it, it will either act immediately or never have a chance. Because all of this comes very quickly."
In addition, despite high hopes and sufficient funds in recent years, cryptocurrencies and their support networks have not yet brought about any meaningful and tangible use. Moreover, as far as the current situation is concerned, there is almost no sign that Bitcoin is developing into a viable currency - either as a means of transaction or as a real store of value. In the traditional sense, transaction and value storage are the two pillars of money.
In 2017, Bitcoin also experienced crazy growth. At that time, the price of Bitcoin rose to nearly 20000 dollars, but then plummeted 80%. It can be seen that Bitcoin is highly volatile, even a highly speculative asset.
An industry executive pointed out that in the past year, the price of Bitcoin has been growing explosively, but the price fluctuation is still alarming. This would dissuade many cautious investors.
They also stressed that if the price fluctuation within a day is often within 5% to 10%, it is difficult for people to accept Bitcoin as a means of value storage.
JPMorgan Chase Analyst Nikolaos Panigirtzoglou also pointed out that although the payment of cryptocurrency has increased since 2018, the overall transaction volume can still be ignored. Transaction costs remain high, with a handling fee of up to $25 per transfer. The sharp fluctuations of Bitcoin have left both buyers and sellers in fear.
Bryan Routledge, an associate professor of finance at Carnegie Mellon University's Tepper School of Business, said that these fluctuations mean that it is difficult to say whether there will be more businesses or corporate finance executives willing to follow Tesla's footsteps.
Even the financial experts who hold an open attitude to Bitcoin said that they do not believe that Bitcoin will generally appear in the investment industry's portfolio in the near future.
Krishna Memani, chief investment officer of the endowment fund of Lafayette College, said that at present, he did not see any mainstream investment institutions willing to buy Bitcoin substantively. "I don't think this time has come, and it will not come soon."
Difficult to gain mainstream recognition
In the financial industry, many people suspect that Bitcoin may never become mainstream. At present, the mainstream financial industry's main attitude towards Bitcoin is still indifference, suspicion, boredom and occasional ridicule.
Berkshire Hathaway Warren Buffett, the CEO of the company and the "god of stocks", has repeatedly criticized Bitcoin, and even compared it to "rat poison".
His old partner Charlie Munger also held the same view. As early as at the 2018 Berkshire Annual General Meeting, Munger called virtual monetary assets "poison" and "disgusting".
At the recent annual shareholders' meeting of the Daily Weekly, Munger also said that Bitcoin would not become a global trading medium. It is too volatile to serve as a trading medium.
In 2018, Microsoft The founder Bill Gates also said that he would short Bitcoin if he could. "For an asset class, if it can't create anything, then you shouldn't expect its price to rise."
Although his view has changed recently, Gates still said that he did not invest in Bitcoin. He even reminded: "If you don't have as much money as Musketec, I suggest you wait and see. This is my basic view (Bitcoin)."
In February this year, JPMorgan analysts also said in an evaluation report that Bitcoin is a "left-wing economy" and the worst hedging tool when the stock market plummets. Bitcoin, which has been in full swing recently, is just an "economic show" that seems very lively.
In addition, according to Bank of America In the latest survey of fund managers, some government officials and legislators have also warned that what investors see is nothing but fanaticism.
Tim Lane, Vice President of the Central Bank of Canada, once pointed out: "The recent price rise of Bitcoin looks not like a trend, but more like fanatical speculation. In this atmosphere, a high-profile tweet is enough to trigger a sudden rise in prices."
Janet Yellen, the US Treasury Secretary, also warned that Bitcoin posed a danger to investors and the public. She said at the DealBook conference of the New York Times: "I don't think Bitcoin can be widely used as a trading mechanism. To some extent, I am worried that it will usually be used for illegal financing. Using it to trade is an extremely inefficient way, and it needs to consume amazing power to process transactions."
Picture: Janet Yellen, US Treasury Secretary Christine Lagarde, the president of the European Central Bank, even more "blasted" Bitcoin as a "highly speculative asset", which was used in the past to engage in some interesting businesses and some "interesting" and totally reprehensible money laundering activities.
Mahluv, member of the European Central Bank's management committee, also warned that Bitcoin investors need to be prepared to "lose all funds".
It is reported that several countries currently prohibit virtual currency transactions, including Bitcoin.
As early as December 2013, the Central Bank of China and other five ministries and commissions issued a document pointing out that Bitcoin is not a real currency and cannot and should not be used as currency in the market. On September 4, 2017, the Central Bank and other seven ministries and commissions jointly issued the Announcement on Preventing the Financing Risks of Token Issuance, requiring all kinds of ICOs (first token issuance) to stop immediately and relevant trading platforms to stop operating.
In January this year, the Economic Daily also issued an article saying that China has always implemented strict supervision on virtual currencies such as Bitcoin, and investment in Bitcoin faces regulatory risks.
Recently, the management of Bitcoin and other virtual currencies in China has been under a "tight spell".
On February 25, the Development and Reform Commission of the Inner Mongolia Autonomous Region issued a document saying that it is strictly prohibited to build new virtual currency mining projects, and plans to comprehensively clean up and shut down the virtual currency mining projects by the end of April 2021.
From all signs, the mainstream of Bitcoin is still difficult. （ Compiled by: Xiaobai ）
