An unprecedented intoxication had driven the crypto currency Bitcoin up to 20,000 dollars a year and a half ago. After the crash of the digital currency at the end of 2018, the market now seems to be on the upswing again.
The upward swings in the Bitcoin exchange rate have increased significantly in recent weeks. The thousand marks fell last almost by the day, at the end of May 2019 the Bitcoin exchange rate settled at almost 9000 dollars. This is still less than half of the high of around 20,000 dollars reached on 17 December 2017. However, this record was only reached for a very short time.
According to experts, there are a whole range of reasons for the rise in the price of Bitcoin and most other crypto currencies in recent weeks. These include current buying motives of investors, but also long-term changes that could make “cryptos” an integral part of the international financial and payment system.
Further price information on Bitcoin in US dollars
First of all, there is the higher acceptance of Bitcoin as a form of payment or transaction system. Large corporations, particularly in the USA, have now approved the most important crypto currency for direct or indirect payment, such as Starbucks, Microsoft or the retailers Whole Foods or Gamestop.
In addition, speculation on a new “asset class” crypto currencies is currently driving prices higher and higher. Institutional investors, including large investors such as insurance companies or investment companies, as well as family offices, are on the lookout for investment opportunities for wealthy private customers.
Major investors want a new asset class
The US fund company Fidelity, for example, one of the largest private money managers in the world, recently announced that it would make the Bitcoin available to precisely these customers. Previously, brokers like ETrade and Robinhood had announced similar plans. According to a recent study, one in two institutional is considering entering the crypto market. In early May, Facebook even announced that it was working on its own payment system based on a crypto solution.
The attractiveness for investors is mainly due to two reasons. Firstly, the Bitcoin price does not “correlate” with the development of classic asset classes such as equities, bonds or commodities. On the other hand, the world of cryptos is independent of the “paper currencies” that are moved by political crises or the monetary policy of central banks. This characteristic also makes cyber-currencies interesting as “additives” in a large, widely diversified portfolio.
Forward contracts and ETFs?
In addition, there are currently more investment instruments with which both professionals and private investors can invest in Bitcoin. In addition to the direct opportunities to purchase coins directly at one of the many trading centres, several US futures exchanges have futures, i.e. forward contracts on Bitcoin, on offer.
Also the hope for an ETF, an index fund on the Bitcoin continues to exist. The US Securities and Exchange Commission (SEC) has so far always postponed corresponding applications from several fund providers, but there is no clear decision “against” Bitcoin ETFs either. Should this possibility of investing in the crypto world soon be created, this would probably represent a kind of breach in the dam, far higher Bitcoin prices would then be possible due to the higher demand.