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Amid volatile markets, Bitcoin is recognized as a new financial asset. Given the growing number of publicly traded companies acquiring Bitcoin and speculation about who will be next to Square and Tesla, we’re taking a step back to understand how cryptocurrencies emerged as a corporate custody solution
And is this trend likely to increase?Bitcoin is gaining acceptance from year to year. In less than two months, the leading cryptocurrency rose from a $ 350 billion market in December to surpassing its market cap of $ 1 trillion in February after rallying in 2020 to an all-time high. Aside from new institutional funding, there are many factors that are fueling Bitcoin’s growth.
Despite some efforts by regulators to undermine Bitcoin’s potential, companies have accepted that at least Bitcoin, the largest cryptocurrency by market capitalization, is reasonably secure. And for good reason, since according to the Crypto Crime Report 2021 by the blockchain analysis company Chainalysis, the percentage of crime related to cryptocurrency has decreased significantly in the past year.
Until recently, companies were wary of Bitcoin as it works differently than traditional financial markets. Many still cannot come to terms with the decentralized nature of Bitcoin, but many accept it as a working solution.
Consider the number of people involved in the Bitcoin economy. Only the volume of electricity used for Bitcoin mining is comparable to the electricity consumption in a medium-sized European country. The same applies to the number of wallets, which according to the latest estimates by Coinbase and Blockchain.com are between 60 and 100 million. After reaching a market value of $ 1 trillion for the first time this year, Bitcoin is now joining the ranks of a huge decentralized company that has partnered with U.S. tech giants Apple ($ 2.05 billion), Microsoft (1, $ 79 billion) or Tesla ($ 671.5 billion).
At this point, buying Bitcoin is no different from buying Microsoft stock. Bitcoin is certainly not as popular as Microsoft stocks, but as it matures into a store of value, it is becoming attractive to large companies and institutions around the world.
According to recent research by JPMorgan, 58% of investors say Bitcoin will stay here and 22% say their companies are likely to trade or invest in crypto. And that shouldn’t come as a surprise. Big companies buy this asset
true, a fleeting one But Tesla stocks, for example, are just as volatile as Bitcoin. Overall, the volatility of the stock market roughly corresponds to that of the crypto markets.Bitcoin is already being used as a hedge against a possible stock market decline. If the stock market collapses, which cannot be ruled out due to excessive circulation of US dollars, assets like gold or bitcoin could offer some security. And there is clear evidence that Bitcoin is becoming increasingly popular with companies like Apple Pay, PayPal, and Mastercard that are bringing Bitcoin into their networks. Bitcoin exchange-traded funds (ETFs) have also been launched in Canada, and regulators plan to launch them in the United States as well.
At this point, companies led by innovators like Elon Musk are mostly investing in crypto, but more traditional companies are likely to follow in their footsteps as crypto continues to gain acceptance. Many investors view Bitcoin as a volatile, but also a rapidly growing regular financial asset. And in the future, Bitcoin is likely to become part of the portfolios of more investors, just like any other stock out there.
Max Petrovsky is the head of growth and strategy at Waves.
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Disclaimer: Opinions expressed on The Daily Hodl are not investment advice. Investors should do their due diligence before making any high risk investments in Bitcoin, cryptocurrency, or digital assets. Please note that your transfers and trades are made at your own risk and that any losses incurred are your responsibility. The Daily Hodl does not recommend buying or selling any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
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