“Sell the rally, buy the feeder” is a common expression in the financial and investment ecosystem, a maxim that may or may not apply to the current increase in bitcoin. The world’s largest digital asset increased by more than 44% in 2020. While some may suggest waiting for the price to drop, the right time to deposit may now be.
One of the strong arguments to invest in Bitcoin is its correlation with the flow stock model. Gold is one of the most liquid assets in the industry and its scarcity aspect has greatly improved its S2F share over time. Bitcoin has remained in most gold properties as an asset, highlighting that it is 10 times better than precious metal.
In terms of real data, Bitcoin has followed the S2F model almost consistently and over the past year, deviations from S2F projections have been small. However, the fact that the market capitalization of Bitcoin at the time of printing was only $ 190 billion had significant future potential. The market value of gold is close to $ 8-10 billion. Since Bitcoin is likely to follow the S2F model, this asset class could easily reach the same market valuation in the next decade.
The Bitcoin fear and greed index has also shown a positive sentiment from investors in line with the current market. At the time of publication, the index had a “gourmet” rating of 63, indicating an influx of traders. Such a scenario usually involves curbing sudden investments. Unfortunately, Bitcoin does not have the same properties as traditional assets.
Although Bitcoin has been around for more than a decade, it is still a relatively new asset class. Digital assets are largely asymmetric, which means they may not decrease or decrease significantly in the long term. Short-term volatility is a common phenomenon for cryptocurrencies. In addition to short-term dumps, Bitcoin ticks all the correct boxes from a long-term perspective.
The performance of the world’s largest cryptocurrency in 2019 also did not disappoint.
Bitcoin has generally grown by more than 95%, surpassing gold, the S&P 500 and even the US government bonds. UU. It should be noted that Bitcoin saw a 50% correction from its previous high of $ 13,800, but the increase in the valuation was still significant. Crypto assets were not depreciated as they did after the bullish race of 2017, when the crisis reduced its valuation from $ 20,000 to $ 3,000.
The main difference between the bullfight of 2017 and the current rally is market maturity and currency circulation. From a total of 21 million BTC, 18.2 million BTCS have already been issued. In addition, three years ago, institutional acceptance and constructive knowledge about Bitcoin was still lacking, which clouded people’s understanding of Bitcoin.
At the time of printing, the financial sector and the main media are more aware of digital assets. In fact, regulators around the world take the Bitcoin market position seriously and often discuss the regulation of digital assets. The Davos World Economic Forum, which announces a consortium to regulate crypto assets and stable currencies, is proof of that.