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#1 03-12-2020 09:11:43

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 3068
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Bitcoin hits an absolute record price - what's next?

Bitcoin hits an absolute record price - what's next?


Bitcoin is in fashion these days. Three years after trading at close to $20,000, it has finally marked a new record. Coincidentally or not, it once again set a new record in December.

We all know what happened after December 2017: Bitcoin lost over 80% of its value. This is why many institutional and long-term investors are rejecting Bitcoin, as no reserve of value should experience such fluctuations.

As a result, digital currency is more attractive to traders than to institutional investors. However, there are increasing signs that the institutional community sees Bitcoin as an alternative to gold. We're not talking about PayPal, Square or MicroStrategy, which have announced investments in Bitcoin, but about even bigger names.

Guggenheim Fund Reserves Turns to Bitcoin

In a recent announcement, the Guggenheim Fund Reserve stresses that it sees Bitcoin and the cryptocurrency market as a potential market in which to invest. One of its funds, the $5.4 billion Macro Opportunities Fund, reserves the right to invest in the Grayscale Bitcoin Trust. In turn, the shares of Greyscale are invested in Bitcoin, making Guggenheim's exposure to Bitcoin indirect. Yet the fact that such a large institutional investor reserves the right to invest in Bitcoin says a lot about why this crypto has reached a new record.

Specifically, the institutional investor plans to invest up to 9.9% of its assets in crypto-currencies, and more specifically in Bitcoins. This far exceeds the $149million invested by MicroStrategy or the $50 million announced by Square.

However, why would Guggenheim turn to Grayscale for exposure to Bitcoin? The answer is very simple: there are not enough Bitcoins to buy.

Few traders know that 4.09% of addresses own 96.54% of all Bitcoins. This is both remarkable and scary.

Remember that this is an unregulated market. With all these Bitcoins in the hands of the "few", the rest of the investors remain exposed to market manipulation.

Bitcoin's rally this year has been nothing short of spectacular. The increased adoption by public companies is driving its price down.

Yet it is still extremely volatile. Last week, in the middle of Thanksgiving, it fell 12.9% in less than 1 day. This week, it did something similar just after reaching a new record.

While the gains can be interesting, this kind of behaviour makes the story 3 years ago fairly easy to repeat. Bitcoin must avoid such extreme moves if it wants the institutional investment community to pay more attention to it. On the other hand, it is difficult to do so with so many cards in the hands of a few.

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