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Elon Musk invested $ 1,5 billion in bitcoin: pros and cons of investing in cryptocurrency

At the beginning of 2021, the bitcoin rate broke all records, in February the value of the cryptocurrency exceeded $ 47 for the first time. But its future is still the subject of controversy around the world. Nobody knows what awaits him - further growth or a sharp fall. But the market situation is definitely not what it was a few years ago. What can you expect from bitcoin and who believes in it, said the publication with the BBC.

Photo: Shutterstock

"And we told you!"

The "new gold rush", as the hype around the cryptocurrency market is often called, has filled the network with both fabulous success stories and bitter stories of financial crashes.

In 2011, an American teenager, Eric Finman, invested a thousand dollars borrowed from his grandmother in bitcoins. Then the guy was 12 years old. Now he is 22 and he is a millionaire.

In recent years, the young man has lectured and given interviews, in which he convinces: the future is behind cryptocurrency, and those who still doubt it are mistaken.

“If you don’t become a billionaire within the next ten years, it will be your only fault,” said Finman.

The problem, however, is that for every example of cryptocurrency success, there are just as many dramatic failures.

On the subject: The family invested all their money in bitcoin: how they live after three years

The peak of failures of bitcoin investors fell on 2018, when, against the background of the rapid growth of the cryptocurrency rate in 2017, many invested in it, hoping for an easy increase in money.

However, not everyone did it on time. Many investors bought bitcoin when it was close to the $ 20 mark. They did not know that very soon the price would creep down and in December 000 it would be only slightly more than $ 2018.

In order to save at least some part of their funds, investors were in a hurry to get rid of an asset that did not meet their expectations, albeit at a lower price than they bought.

In those days, social networks were full of messages that the bitcoin bubble had finally burst, and many Internet users gloated over would-be depositors who naively believed in an easy way to make money.

Cryptocurrency enthusiasts didn't give up. They assured that a temporary drop in the market was normal and expected. Everyone, they say, understood that sooner or later this had to happen, but in the long term, a return to a positive trend is inevitable.

In the eyes of skeptics, all this, however, looked like the usual inability to come to terms with your own mistake.

As it will become clear a few years later, with the announcement of the burial of the cryptocurrency, critics nevertheless hurried somewhat, and their opponents turned out to be closer to the truth. But for how long?

Predict, do not predict

The problem with predicting the rate of Bitcoin and other cryptocurrencies is that they don't come true very often - at least in the short term.

For example, some experts predicted a cross-section of the mark of $ 50 thousand, or even $ 100 back in 000, others predicted a cryptocurrency collapse in 2018.

No less polarizing assessments are heard now.

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The representative of the investment company Guggenheim Partners Scott Minerd, for example, does not exclude a fall in the bitcoin rate in the near future, but he also speaks of a growth potential of $ 600 in the long term. Minerd is convinced that the role of cryptocurrency in the global economy will only grow.

The same opinion is from JPMorgan analysts, who, however, predict a somewhat more modest rate - at $ 146. They say that cryptocurrency will gradually replace gold as a defensive asset, but the process will take several years.

But David Rosenberg of Rosenberg Research has the opposite opinion: bitcoin, according to him, is nothing more than a bubble that has no future.

Cryptocurrency is a highly volatile asset, the price of which is constantly fluctuating in one direction or the other. In just a day, the rate can often jump by several tens of percent, and then fall just as rapidly.

For example, the mere mention of bitcoin by billionaire Elon Musk can lead to a sharp increase. When he added the hashtag #bitcoin to his Twitter profile at the end of January, the cryptocurrency rate quickly grew by $ 5000.

And obviously, if the value of bitcoin is so easy to increase, it can just as easily be brought down, critics warn. Therefore, making any predictions about its course is a thankless job.

Why bitcoin is getting more expensive and what has changed

Despite such uncertainty about the future of cryptocurrency, most analysts agree that the market situation has changed significantly compared to 2017-2018.

The then rise in the bitcoin rate and its collapse occurred against the backdrop of the "hype", which was based on private investors - ordinary people who, having learned about the frantic rise in the rate, rushed to invest their funds in bitcoin in the hope of making quick money.

And then - at the first bad news - they began to run away from the cryptocurrency market just as quickly.

For serious financial players, cryptocurrency was still an undiscovered territory that was treated with caution. However, now everything has changed. Large companies seem to have begun to take the new market more seriously, seeing the prospect in it.

Tesla recently invested $ 1,5 billion in bitcoin, and MassMutual, MicroStrategy, Square and Ruffer Investment have purchased this cryptocurrency for tens or hundreds of millions.

In January, one of the world's largest investment companies, BlackRock, became interested in bitcoin, which manages assets worth $ 8,7 trillion, and the international payment system PayPal launched operations with cryptocurrency in the United States.

On the subject: The man who threw $ 127 million in bitcoins, seeking permission to rummage in a landfill

All this became positive signals for the market and helped the rapid rise in the price of bitcoin.

Proponents of the idea of ​​cryptocurrency see in the arrival of large players a long-awaited confirmation that the world is gradually beginning to recognize what they talked about ten years ago - digital currencies are the future and over time the same bitcoin will cost hundreds of thousands, if not millions.

But, of course, not everyone agrees with them.

"It's still a bubble"

“If you judge financial bubbles by the level of buyers' optimism, then Bitcoin is the largest I have ever seen. Bitcoin owners are more confident in their righteousness than investors during the dot-com bubbles or the mortgage crisis, ”said Peter Schiff, head of investment company Euro Pacific Capital.

Schiff is one of the world's most renowned critics of cryptocurrency. True, he is often reminded of the words he said in 2011, when Bitcoin was worth about a dollar.

Then he said that it would be better to invest $ 10 in gold than in bitcoin - after all, it is not clear what will happen to the cryptocurrency in a few years. If I had invested in bitcoin, then this $ 000 would now turn into hundreds of millions.

However, Schiff is far from the only one who does not believe in the prospects of cryptocurrency.

Critics say that even the arrival of large companies on the market does not mean anything: they say, during previous bubbles, they also did not see future problems.

Skeptics like to compare the current situation with cryptocurrency to the so-called dot-com bubble in the late 1990s and early 2000s.

Then investors began to massively invest in Internet companies, so they believed that a "new era of the economy" was coming, but in practice, a huge number of these firms ended up being "dummies" with no prospects.

Even cryptocurrency proponents agree with this analogy from time to time. On the market, they say, there are actually thousands of cryptocurrency projects presented and it is obvious that most of them are "bloated" and have no future.

They suggest that a market crash is quite possible, but even it does not mean the collapse of the cryptocurrency idea - just as the dot-com crisis did not mean the end of the Internet business idea.

And just as Google, Amazon and eBay at one time came after the collapse and went on to rapid growth, becoming one of the most successful companies in the world, so the best cryptocurrency projects will still survive, crypto enthusiasts are convinced, and will become the basis of the economy of the future.

As ForumDaily wrote earlier:

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