Alex has been an investor for years now. He has investments in the stock market, cryptocurrencies, bonds, and the United States Treasury.
A General Reflection
I've been watching Bitcoin for some years, and I've been ever curious about the variables that affect its value. Bitcoin lacks the gold standard, and its value seems to be measured collectively by buyers on the market. Of course, this could be said for any currency, though the gold standard gives us some illusions that there is a physical element to fiat money. Bitcoin, and other cryptocurrencies, may be waking us up the the fact that all mediums for trade are set by values constructed in the minds of various communities associated with those mediums.
So, with all of this in mind; I have been asking myself - what has been giving Bitcoin its apparent value? This question has been burning inside of me as the currency has reached all-time highs in value - again! One Bitcoin is now more than $27,000! The trend is going as I had hoped; up and down, but steadily upward. Now, who knows what will happen in the long run, but I'd rather lose a few bucks, than regret never having had kept my investments. That in mind, I will stress that the best time to invest is often when the product's value is relatively low. That being stated, now may not be the best time to invest. But, what is behind Bitcoin's sudden burst in value? How did we get here, in the first place?
Paypal has been announcing that they are offering cryptocurrency services. I looked into it on my own account, and discovered that they are offering services for Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. Could this have helped Bitcoin to climb so high? Well, the release of these services probably didn't have everything to do with the climb, as all indications point to the services being offered only very recently. However, the announcement that such services would be offered through Paypal occurred in October. If we look at a Bitcoin value graph, we can see a steady climb in the value of Bitcoin since October of this year. I believe that it is likely that Paypal's crypto announcement may have had a sizeable impact on the value of Bitcoin.
Robinhood has been making cryptocurrencies available through their platform, as well. I remember finally being about to do cryptocurrency business with them, not too long ago. This relatively new service may have had some impact on the steady rise in Bitcoin's value. However, I doubt that this company has played a crucial role in Bitcoin's pricing (although they do play a crucial role in the stock market, in general), though I think it would be foolish to think that they haven't had any hand in this game. That isn't to state that I don't like them; in fact, I love their platform! I just don't think they're the primary variable we should be considering, in our investigation of the rise of Bitcoin's price.
Here we are. This is the elephant in the room. People are buying items online now, more than ever. As COVID-19 has become a part of our daily lives, many of us resort to online purchases. And, people can use Paypal, debit and credit cards, and so on. However, cryptocurrency has undoubtedly been used in a great number of transactions. COVID-19's presence in our lives may have changed a number of things, including Bitcoin's value. That being stated, and if this is the case, we may witness Bitcoin reach even greater heights than we've witnessed so far. But, we'll just have to wait and see.
The Natural Flow
Another variable for the change in value may be what I like to think of as "the natural flow of things". That is, I have been predicting that Bitcoin, like human progress, will rise, then fall - then rise higher, and fall again. I think there will be a continuity of ever larger bubbles popping and emerging, throughout the years. I am imperfect, so don't trust me absolutely on this; I just have a feeling. And, feelings can be wrong, so be warned. Still, I think my prediction is reasonable.
However one looks at it, if you bought Bitcoin a year or two ago, then you can probably give a smile to the world. People warned me against Bitcoin, but I'm more concerned that these people missed an opportunity. Like I already covered, please do not take my words to mean you should invest now. If anything, I would be patient until Bitcoin metaphorically falls again. Whatever you decide, just remember that Bitcoin may really be the currency of the future.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2020 Alexander James Guckenberger