Bitcoin, this is all you need to know

Bitcoin, this is all you need to know(Bitcoin Bank)

"Bitcoin and other cryptocurrencies, such as Ethereum, have gained so much interest that they have managed to gain a foothold as an investment alternative, in the face of the continued presence of monetary stimuli, which have led the stock markets to highs," explains Raúl Marcos, CEO of the investment platform with cryptocurrencies Carbon. Marcos highlights the increase in recent months in investors with high assets "who see that, in the same way that they have some gold in their portfolio, now is also the time to add a bit of bitcoin." 

In fact, bitcoin has often been dubbed 'digital gold'. According to ARK Invest, a manager specializing in disruptive innovation, “bitcoin not only shares many of the characteristics of gold, it improves on them. In addition to being scarce and durable, it is also divisible, verifiable, portable and transferable,


Bitcoin and other cryptocurrencies remain unsuitable assets for a number of reasons, such as the fact that transactions made in bitcoins are irreversible, or that they are not under the supervision of any central bank. This implies in practice that capital controls can be circumvented through the use of cryptocurrencies - for which they have often been accused of being instruments for money laundering or terrorist financing - but at the same time exposes the investor to a high risk of hacking and theft of bitcoins without the possibility of claim.

Another important stumbling block to investing in bitcoin is the strong volatility of the market; As it is a currency with a limited number of units - as opposed to a traditional currency, which can be printed by the corresponding central bank as part of its monetary policies - the price oscillation is purely based on demand, without other fundamentals ( macroeconomic data) to analyze. It should be remembered that one bitcoin was exchanged for $ 40,000 at the beginning of 2021; This represents a rise of more than 900% since March 2020, when the price fell to historical lows due to the outbreak of the pandemic.

From ARK Invest they point out, however, that the volatility of bitcoin has been decreasing over time. "As its adoption increases, the marginal demand for bitcoin should become a lower percentage of its entire network value, decreasing the magnitude of price swings."

Observes that part of the recent rise has also been driven by the entry of new players in the crypto world, mainly companies and investment funds, "so in some way we can say that investment in bitcoin has been legitimized" . For Marcos it is an important step, because "it means that the currency is no longer just purely speculative, it is beginning to be seen as another diversifier, due to its low correlation with traditional assets."

These comments focus on institutional investors. In the case of retail investors, the expert recommends taking a series of precautions before taking the leap. In the first place, "understand that bitcoin has a future, but investment carries many risks because its price experiences many fluctuations that can cause the loss of money and you are also exposed to the fact that they can steal the currency." Therefore, he recommends "investing an initial amount of money that we do not mind losing", and bearing in mind that "the ultimate goal of investing in bitcoin should be to diversify."

The last recommendation is that investors consider delegating management instead of buying bitcoin directly: “The crypto world today is still something like the Wild West: there are between 30,000 and 40,000 cryptocurrencies currently trading, there are difficulties in valuing and distinguishing them. Delegating management makes sense, because you can count on an experienced analysis team, which is up-to-date and offers security ”.


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    27 Aug 2019
    Tomas Mandy

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      27 Aug 2019
      Britney Millner

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    27 Aug 2019
    Simon Downey

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