Bitcoin’s value continues to boom, soaring as high as $5,000 in December 2017. The cryptocurrency’s value could go up even further in the future and surpass stocks on most measures. Experts predict that this rise is not just due to bitcoin being a good investment; instead their opinion suggests it highlights how unique Bitcoin is compared with other currencies.
Bitcoin is a cryptocurrency that has been gaining in popularity over the past few years. The cryptocurrency’s value has increased rapidly and it is now outperforming stocks in the long term. Read more in detail here: which of the following is not a characteristic of bitcoin.
According to some industry insiders, the recent stock and cryptocurrency market collapses have presented yet another opportunity to notice greater return potential for crypto over equities.
The crypto market had one of its worst sell-offs in history last week, with total market value dropping more than 30% from $1.8 trillion on May 4 to $1.2 trillion on May 12. Bitcoin (BTC), the most valuable digital currency by market cap, fell below $27,000 for the first time since late 2020, shedding 30% of its value in the process.
However, crypto has not been immune to market volatility. The stock market has also had one of its worst periods since 2020, with the tech-heavy Nasdaq Composite losing more than 12% and plummeting below 12,000 points during that time.
Apple and Microsoft both had their market capitalizations drop by about 13%, while Tesla’s market capitalization dropped by 23% from $986 billion to $754 billion.
Cryptocurrency markets are more unpredictable than stock markets, posing more dangers but also providing greater possibilities, according to ANB Investments CEO Jaime Baeza.
“Over the long run, and without going into too much detail,” Baeza added, “I think crypto as a whole offers higher risk-return prospects.”
Similar sentiments were shared by Huobi Group chief financial officer Lily Zhang, who said that the volatility of bitcoin means there are “more potential to generate large profits with cryptocurrency.”
“It’s crucial to remember that we’re in the middle of a new Fed rate rise cycle, and both cryptocurrencies and tech stocks might be prone to rapid capital outflows, leaving them vulnerable to steep declines,” Zhang said.
Crypto has a larger beta to market sentiment than stock markets, according to Ryan Shea, a crypto economist at fintech company Trakx.io. When investors grow more hesitant to take risks, the market sees substantially greater price falls, but when risk appetite improves, the market enjoys significantly higher price gains, according to Shea.
“In the long run, we believe that certain crypto-assets – fixed or restricted supply cryptocurrencies like Bitcoin — will outperform fiat money as a store of value.”
According to Huobi’s CFO, the correlation between the crypto market and the U.S. stock market has been strong since the end of 2020. Bitcoin’s correlation with the S&P 500 was as high as 0.7 in January, and has remained high since then, she added.
Analysts analyze Bitcoin’s bumpy route to become a risk-free asset.
“Because of this link, it’s difficult to protect against overall portfolio price volatility when assets are split between stocks and crypto assets.” “However, investors may reduce volatility by managing their risky asset holdings and modifying their asset allocation methods as well as the diversity of assets they invest in within these two asset classes,” Zhang said.
According to CoinGecko statistics, crypto markets are experiencing a substantial comeback at the time of writing, with Bitcoin up nearly 9% in the last 24 hours, trading at $30,610. Over the last 30 days, the cryptocurrency has lost 23% of its value.
The “when to buy bitcoin 2021” is a question that many people have been asking for quite some time. The economist who made this statement, says Bitcoin will be the superior cryptocurrency in the long term.
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