Bitcoin keeps plummeting. A chance to buy or leave?

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Top1Markets Representative (unconfirmed)
At present, the proportion of Bitcoin used for daily transactions is still very small, but investors are curious and afraid of missing money-making opportunities, so that their transaction amount continues to rise. Under COVID-19, market news stimulated a record high of about 64,000 US dollars. As of early June, it was hovering around 37,000 US dollars.

Even though Bitcoin is being pressured by the regulatory wave and China has banned it, at the same time, some large companies, institutional investors, insurance companies, etc. continue to buy Bitcoin as an inflation hedge. For example, Cathie Wood, founder of Ark Investments, continues to be optimistic about the prospects of Bitcoin.

Cathie Wood pointed out that Bitcoin is being sold off and it is hard to say when it will bottom out. However, she emphasized that it is a "bottom-out" opportunity and still expects Bitcoin to rise to $500,000. "Our belief is still very strong. We have checked all the indicators that we are in a "capitulation sell-off", and this is an excellent time to buy. No matter what the asset is, the "capitulation sell-off" is to buy, Bitcoin It is now in the special offer stage.".

Tesla founder Elon Musk posted on Twitter that Tesla has a "diamond hand", implying that he has no fear of market fluctuations and has been holding Bitcoin until his goal is achieved.

In view of this, prudent investors may also be considering whether to buy.

Can Bitcoin replace gold?
The only similarity between Bitcoin and gold is that neither will give you dividends, interest, etc.

It's just that gold is still locked in the vaults by central banks. Because if a war breaks out and the Internet base station is attacked, it is more convenient to use gold to trade than to enter the bitcoin remittance address on a mobile phone without signal.

Gold is often used for hedging in asset allocation, because it is lowly related to risky assets such as stocks and has defensive power from falling prices. In the past 20 years, the SPDR gold ETF, which holds the most physical gold in the world, has a correlation coefficient of 0.43 with the US stock S&P 500. This means that U.S. stocks rise by 1 yuan and gold will only rise 0.43; on the contrary, when U.S. stocks fall, gold will also fall less.

Since its inception in 2008, the correlation coefficient between Bitcoin and US stocks is as high as 0.95, almost following the same trend, and it is impossible to avoid risks. More importantly, gold has a long-term negative correlation with the real interest rate of the United States, so it can maintain its value when the economy is bad, and the hedging effect is also better.

How about other cryptocurrencies?
Bitcoin is just one of the thousands of cryptocurrencies on the market. Is it always okay to buy other currencies? I'm sorry, but the result is still disappointing. According to the statistics of CoinMarketPlace, the changes in the market value of the world's top four cryptocurrencies can be seen that all the money that has soared has been poured into Bitcoin, and other currencies are almost non-existent.

The most anticipated function of cryptocurrency is to replace the legal tender issued by the state, and at the same time has the three major currency functions of pricing, trading and storage. So far, only the "stable currency" that is 1:1 with the US dollar can accomplish these three tasks at the same time.

However, Facebook's Libra coin (Libra) originally planned to be issued globally was targeted by central banks and was finally renamed "Diem", which is expected to be issued only in the United States.

The US dollar stable currency with the largest market value, USDT (TEdacoin), has been involved in an illegal fund misappropriation case and is being investigated by the New York Attorney General's Office.

Any cryptocurrency that threatens the status of the central bank is still encountering high walls.