The Bitcoin scratches again at the 20,000 dollar price. Three financial experts and an investor explain what the Corona crisis and digital banks have to do with it – and estimate cautiously how it continues.
There were days in fall 2017 when Isabelle* opened the Blockfolio crypto app on her cell phone and thought, “Wow. I could live on that. I could also quit my job,” she said in a whatsapp call with t3n. Her crypto portfolio was just under a million dollars at the time. If you are new to BTC trading, trading robots can help. Check out this website for more information.
But she also remembers days in winter 2018 when she opened the app and thought: “Ah crass, now it’s only half of the week before last” – while the courses continued to fall. “I was on a business trip and couldn’t do anything because I had left my hardware wallet at home,” she says, “so I just left it there instead of looking in there every day. In the last few weeks, it was rather friends who said It’s going up again, crassly.” On December 1, the Bitcoin course broke its old record from December 2017 and climbed to over 19,800 dollars at times.
New record – and old fears
- With the new record, the Bitcoin is raising old hopes, but also old fears: After it had already scratched the $20,000 valuation on December 17, 2017, it slipped below $4,000 by January 2019. With this year’s record this year, too, investors* are wondering whether things will continue to go up – or whether another downturn is imminent.
- One difference to the 2017 high is that in 2017 the boom was driven primarily by private investors* in Europe, the US and Asia – and for the institutional financial world Bitcoin 2017 was still a rather exotic phenomenon. Investors like Jordan Belfort still prominently described Bitcoin 2017 as a “huge scam”. In the meantime, the financial world seems to have gotten used to Bitcoin and its ups and downs. In May 2020, billionaire and hedge fund manager Paul Tudor Jones made headlines when he said he had invested almost two percent of his portfolio in Bitcoin.
- Bitcoin’s institutionalization is also taking place in Germany: in 2017, Bitcoin was mainly traded via pure online exchanges such as Coinbase, Kraken or Binance. For a list of more exchanges click here. In the meantime, interested parties can also go via more traditional players such as the Digital Exchange of the Stuttgart Stock Exchange.
“Since the beginning of the year we have been filling the inquiry pipeline of institutional investors and traditional retail investment brokers who now want to offer their customers access to Bitcoin and Co,” says Peter Großkopf, Managing Director and CTO at the Stuttgart Digital Exchange in a telephone call. “Since the Fintech boom, the financial industry has been trying to think in terms of customers – and because interest in crypto-currencies is growing, the institutes are also noticing this.
In the current boom, however, Großkopf observes not only institutional investors* but also more and more companies that park their liquid assets in Bitcoin in the meantime: “Microstrategy and Square use Bitcoin in their treasury for their liquidity management. In the current negative interest rate environment in Europe, even established companies such as insurance companies from Germany are increasingly becoming aware of the new investment opportunity and are actively considering investing money in Bitcoin”.
When you call Ramin Niroumand and ask if he has some Bitcoin, he has to laugh at first. “Unfortunately no, in a way a classical example of a cobbler, who did not remain with his lasts. Niroumand is the founder and CEO of the Fintech ecosystem Finleap.
Niroumand sees the reasons for the new Bitcoin record first and foremost in the fact that people in the corona crisis are looking for new, gold-like forms of investment. “I cannot imagine that the Bitcoin is currently already significantly institutionalized. The reasons are much more to be sought in the fact that Bitcoin is also replacing gold in this crisis – and has thus arrived in the broad masses,” says Niroumand. The price, according to Niroumand, should still settle at an average value.
In the long term, however, Niroumand also believes that “crypto will become an essential part of the investment world. Especially since Germany is also trying to position itself as a crypto location: “The German government has rarely been as proactive [in tech regulation] as it has been in the crypto sector.
Philipp Sandner is a professor at the Frankfurt School of Finance and Management and heads the Blockchain Center there. On the phone he explains that he sees two reasons for the current increase: One, Sandner says, is that investors in the corona crisis are worried about where they invest their money anyway. “Humans want to receive their purchasing power and land with real estates, shares and evenly also with Bitcoin.
In addition, Sandner sees in addition, a on a long-term basis rising demand: Also Family Offices show now an early interest, Finanzdienstleister such as Paypal and Revolut concern themselves with it. Thus the demand rises. On the supply side it is in such a way that increasingly fewer Bitcoins are produced – up-to-date there are already 18.5 million of the altogether producible 21 million. Thus possibly a rising demand meets constantly sinking supply.
“Can one estimate the development of the future at the Bitcoin course so far,” I ask Philipp Sandner. “Principally not at all, of course,” Sandner’s answer reads. “But year by year more and more young people come from the universities, who deal with it and possibly invest. And it is not foreseeable that the degree of expansion will decrease.
To a certain extent, the power of Bitcoin also lies in this familiarity. “The Bitcoin is in many stock exchanges already firmly programmed, you do not get so fast no more away , so Sandner. “Up-to-date most traditional stock exchanges concern themselves also particularly with Bitcoin and only little other crypto currencies. That leads to the fact that the Bitcoin remains number one.
With prognoses for the future of the course in addition, Professor Sandner is careful: “I believe that the Bitcoin could reach the mark of 50.000 euro at the end of 2021. But there are also some reasons why this could not happen: Regulation in China or America, which could lead to a collapse in prices; a social stigmatization because of the enormous power consumption or technical risks”.
Fabian Schär, Professor of Blockchain Technology at the University of Basel, also advises caution when making price forecasts: “If the market knew for certain that the price would soon reach 50,000 euros, this information would already be priced in today,” he writes in an e-mail. “In reality, the future price development is unclear. Of course it is possible that we will see much higher price levels, but the opposite is also possible”.
If you ask the almost crypto-millionaire Isabelle, she says: “I learned last time not to get excited too soon. I’ve been seeing the price rise again for weeks – but I haven’t bought any more either. I believe in Bitcoin in the long term – but of course not as a single investment, but in a portfolio between others”.
Another reason why it could reach that price is that it is a very good opportunity for people who have no bank accounts. You can read more at this article here.
Bitcoin instead of gold: Why a high-ranking BlackRock manager sees BTC in front
In the battle between the oldest crypto currency Bitcoin and the precious metal gold, there is a clear winner, according to a Black Rock official: BTC.
- BlackRock CIO sees BTC in better position than gold
- More functional than the precious metal
- Younger generation’s affinity for technology
The question of whether Bitcoin can be valued as digital gold has been occupying the markets for some time. A BlackRock manager answered this question for itself clearly per BTC – he believes in the fact that on a long-term basis gold must make place for the crypto currency.
In his opinion, Bitcoin is superior to gold. “Do I believe that [Bitcoin] is there permanently and could largely replace gold? Yes, I do, because it is so much more practical than passing on a gold bar,” said Rieder. However, he himself does not hold Bitcoins and does not want to call for the purchase of the crypto-currency, he emphasized. “I use it hardly and/or not at all in my enterprise or Geschäftsportfolios , explain Rieder further.
Bitcoin addresses young generation
Nevertheless, he believes that digital coin is definitely sustainable – and better than gold, especially among the younger generation. In his opinion, the younger generation has a different perception of digital payment systems, partly due to the fact that they are more technology-oriented. Digital currencies and their perception by millennials is real.
However, the BlackRock manager does not want to comment on whether this fact justifies the current high price of Bitcoin. After all, BTC has reached a new all-time high at the start of the week and only just missed the 20,000 US dollar mark per BTC. “It is difficult to say whether Bitcoin is worth the price at which it is currently traded,” he explained. Nevertheless, he sees great opportunities for Bitcoin to take away gold’s status as a store of value and crisis currency.