Bitcoin Gets A Boost In 2020

Bitcoin Gets A Boost In 2020

about 4 years ago2 mins

As geopolitical risks have risen in 2020, so too has the price of bitcoin. And that 22% increase may strengthen claims to “digital gold” status... 🏆

What does this mean?

A recent US airstrike in Iran sent jitters through stock markets – but the price of “safe haven” investments like gold soared. Bitcoin’s similar role as a potential store of value in troubled times – and its increasingly strong relationship with gold price movements – was highlighted in a report from data giant Bloomberg last week: with the supply of both gold and bitcoin limited, increased demand means increased prices.

Source: Bloomberg
Source: Bloomberg

Bitcoin supply is projected to grow by just 2.5% this year, partly thanks to May’s pre-programmed “halving” of the amount of cryptocurrency with which miners are rewarded. As well as increasing competition among miners, constricted bitcoin supply coincides with growth in derivative investments linked to its price – with bitcoin options from major exchange CME, launched Monday, the latest innovation.

US authorities are enthusiastically regulating these. But they’re less taken with the self-proclaimed inventor of bitcoin. Recent developments in a long-running court case – including the apparent gaining of access to a $10 billion bitcoin stash – have nevertheless seen the prices of related offshoot cryptocurrencies soar hundreds of percent 😳

Why should I care?

Some fear that the eyebrow-raising price rises of bitcoin cash and bitcoin SV may be unscrupulous attempts by persons unnamed to make a quick profit.

But even bitcoin – the would-be “digital gold” – remains prone to volatility, as seen late last year. And that’s where derivatives could come in. While CME’s options had an unspectacular start, such regulated investment opportunities should help investors better establish a single agreed price for bitcoin and hedge their bets – leading to less price volatility and more use as a store of value 🏦

The only problem is that crypto derivative trading remains – for now – dominated by unregulated exchanges…

BitMEX, Huobi and OKEx are among those not regulated in the US
BitMEX, Huobi and OKEx are among those not regulated in the US

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