Originally, it was created to be a way to transact, a currency. Over the years, as bitcoin has grown in value and tx fees have risen, it has transitioned more as a hedge to one’s own currency, similar to how gold works. A store of value. Particularly when China’s and South American currency fell, bitcoin rose. People looked for a “safer” currency (ha).
Recently, we saw a spike in bitcoin’s value, $7.5k to $10k, now to $9k. The rise I would argue was caused by the Chinese panic due to coronavirus. Chinese investors knew this would severely lower GDP in coming quarters and the value of their investments/currency drop.
However the recent trend (-10% this week) has me puzzled. I would think bitcoin would have a very small negative beta to major markets (meaning when major markets rise, it slightly drops). However as major markets fell 5%+ this week, crypto did more than that. I would have expected the Italian panic to cause bitcoin to rise.
As gold and other commodities have risen, I would have expected similar for crypto, a neutral currency.
What are your thoughts on Crypto and how it reacts to the market? At this point I thought it was a store of value, closely related to commodities.
Recently, we saw a spike in bitcoin’s value, $7.5k to $10k, now to $9k. The rise I would argue was caused by the Chinese panic due to coronavirus. Chinese investors knew this would severely lower GDP in coming quarters and the value of their investments/currency drop.
However the recent trend (-10% this week) has me puzzled. I would think bitcoin would have a very small negative beta to major markets (meaning when major markets rise, it slightly drops). However as major markets fell 5%+ this week, crypto did more than that. I would have expected the Italian panic to cause bitcoin to rise.
As gold and other commodities have risen, I would have expected similar for crypto, a neutral currency.
What are your thoughts on Crypto and how it reacts to the market? At this point I thought it was a store of value, closely related to commodities.