It is said on the street that Bitcoin is a profitable asset to invest in. Apparently, Bitcoin is now reliable. The price has not been that way since December 2017 and has seen an admirable 4-fold increase over the minimum price in March of this year. The pandemic changed the world and greatly improved Bitcoin’s reputation. Images of fraud, manipulation, regulatory ambiguity and constant hacking are no longer the first to spring to mind to traditional investors using the word Bitcoin.
The pandemic has accelerated many processes. But it has greatly favored the digitization of the world. In other words, the world is less analog. This means that everything related to the internet has been beautified. The fintech sector in particular was elected the party’s heartbreaker and King of Comparsa. Ah, but we’ve known that for a long time. Because right now? Why is the hike taking place now? Why didn’t it happen a few months ago? Why Bitcoin?
Read on: Speculation versus Investment. What’s the secret sauce to make money?
Why? Well, for the new purchases. And the investor buys for a reason: optimism. That is, the investor sees the future demand for Bitcoin. Predicting the market is never easy. In hindsight, however, it is possible to understand the reasons for the current optimism. By analyzing the news, the mood in the area and the reactions of the market, we can get a rough idea of what is happening.
Four events: Biden’s victory, vaccine approval, coronavirus second wave, and the end of the year. Businesses, funds and individuals make decisions. Things are not good because infections have increased dramatically and there are likely new containment measures in many places. But at least we now have a light in the tunnel. We will certainly have a new monetary and fiscal stimulus package for the first quarter of next year (in the US). This means that the recovery has the necessary liquidity.
On the other hand, there is the problem of the Pfizer and Moderna vaccines, which tell us that sooner or later the pandemic will be manageable and we will eventually return to “normal”. Perhaps this normalcy will not fully materialize in the first semester of next year, but in the second semester we will certainly be much closer. This expectation is turning the markets. And it’s already evident that Bitcoin has benefited quite a bit from it. Right now, companies need something to impress the public. The funds must increase their numbers. And individuals need income to spend Christmas with a full stomach. We’re bad, but we’re fine. And that leads to an increase in times of volatility.
Due to health restrictions, the liquidity of the stimuli decreased mainly in the technology area during this crisis. The stock indices have recovered significantly since the crash in March. However, we must remember that the indices are averages. In other words, not all sectors were equally involved in the recovery during the pandemic. The market was very divided. The digital versus the analog. Growth stocks vs. Value stocks. Defensive stocks versus cyclical stocks.
However, lately everything seems backwards and crazier than usual. Well, because the markets are turning thanks to the news about vaccines. This means, Investors who made big money in the tech sector this year are now investing in companies or assets that are returning to profitability with the return to normal because of the light in the tunnel that we are now seeing. For example. Cinemas, airlines, hotels, bars, restaurants, etc. But cyclical stocks like the automotive and banking sectors also reactivated quite well during this rotation.