More and more institutions are investing in bitcoin
Over the past few years, more and more Wall Street investment firms and financial institutions have been attracted to cryptocurrencies - even if only a fraction of their assets are invested in bitcoin or alternative currencies to try it out.
Many large banks are also attracted by virtual currency.
In August, Goldman appointed a new digital asset director, Matthew McDermott, who is reported to plan to double the number of its crypto asset team.
JPMorgan also launched jpmcoin last year, an internal digital token for institutional banking customers, using a legal blockchain developed by JP Morgan and supervised by Onyx, JPMorgans blockchain division. We have always believed in the potential of blockchain technology and we support cryptocurrencies as long as they are properly controlled and regulated, Umar Farooq, Onyxs chief executive, wrote at the time of the launch
Recently, JP Morgan began to allow customers access to two US cryptocurrency trading websites, coinbase and Gemini. All of this looks like JPMorgan has at least acknowledged the viability of digital assets in the future. Jamie Dimon, JPMorgans CEO, said this week that bitcoin is still not my favorite, but he also said, we will always support blockchain technology.
Third bitcoin halved
In May, bitcoin experienced its third halving.. Historically, every time bitcoin has been halved, prices have surged to record highs in weeks and months.
Every time the bitcoin miners machine verifies the blocks of the bitcoin blockchain (bundled bitcoin transaction data), they get a small bitcoin reward. This is the only way to create a new bitcoin. Every four years, the reward is halved to slow down the creation of new bitcoin, an event called halving..
When bitcoin first started trading in January 2009 and verified the first transaction on the blockchain (Genesis block), the reward for miners was 50 bitcoin. It fell to 25 bitcoin in 2012 and then to 12.5 bitcoin in 2016. After halving it for the third time in May, miners will receive an award of 6.25 bitcoin per block.
As a result of this halving event, profits from bitcoin digging have halved, so the cost of bitcoin transactions has risen dramatically in the past two months. Moreover, since the halving of bitcoin production has slowed the supply of new bitcoin, in theory, the event should boost bitcoin demand.
The talk of the Wall Street bigwigs began to soften
The price of bitcoin has been fluctuated by Wall Streets talk over the past few years. For example, Warren Buffet once said that bitcoin was not an investment, and Munger said that bitcoin was disgusting Stupid... The CEO of JPMorgan Chase once said bitcoin is fraud Worse than tulip bulbs. These are criticisms that have seriously damaged bitcoin prices in the past few years.
But in May, hedge fund giant Paul Tudor Jones revealed that he had invested nearly 2 per cent of his portfolio in bitcoin. He called it the great guess I see it as a very small part of the portfolio It could end up being the best performing of all investments.
The talk from Wall Street is changing more and more. Even if some old-fashioned investors are not enthusiastic about encryption, more and more of them admit that bitcoin, which has been in existence for more than 10 years, will not collapse.
Square, a mobile payment company founded by twitter CEO Jack Dorsey, is also a proponent of bitcoin. In 2018, square added the ability to buy and hold bitcoin in its cash app. This year, the company went further, investing $50 million worth of bitcoin as an asset on its balance sheet.
Squares bet against bitcoin paid off: in the third quarter, the company sold $1.63 billion of bitcoin via the cash app, an increase of 618% over the third quarter of 2019, and a profit of $32 million in the third quarter, up 150% from the third quarter of 2019.
Pantera capital, the cryptocurrency investment company, said in a new report that the shortage of bitcoin was the main reason for the recent price surge, while most of the newly minted bitcoin went to PayPal and cashapp. This led to a further shortage of bitcoin supply, which led to a sharp rise in bitcoin.
Under the new crown epidemic situation, the Federal Reserve continued to release water to promote bitcoin
A common view of the strong rise of the special currency during the new crown epidemic is that the quantitative easing measures of the Federal Reserve and the stimulus plans of governments around the world are better than the special currency because they highlight the scarcity of bitcoin. Only 21 million bitcoin will be created, so there is a ceiling on supply, and there is no central authority to intervene and inject more.
There is a lot of uncertainty in the epidemic, but one thing that seems to be the most certain is that when the central bank prints trillions of dollars or more, the price of bitcoin and other virtual currencies will rise. Dan Morehead, chief executive of Pantera capital, a virtual money investment company, said, gold will rise and bitcoin will rise, which is a hedge against paper currency depreciation.
In the days after election day, when it was not clear who would win, bitcoin rose due to economic uncertainty. Then bitcoin rose further after Biden was widely believed to have won the election, as Bidens victory meant the possibility of a new round of economic stimulus as soon as possible.
By 2021, the United States is likely to face a separate Congress, Dan Morehead wrote in a client report, which could put more pressure on the fed to expand its balance sheet. This is likely to give bitcoin more momentum.