Probabilities for early blooming as Bitcoin prices increase slightly
The largest digital currency by market value increased by 3.3% to 44,085 USD on January 12, right after the announcement of the consumer price index (CPI) to increase by 7% in 2021. This is the highest annual inflation rate recorded in the US since 1982. Some market participants have speculated that the rally will continue, pushing other risky assets such as stocks higher.
On the same day, the Ether cryptocurrency increased 4.5% to $3,375. However, after that, both of these leading major currencies immediately cooled down and adjusted down slightly.
The newly released inflation shows that the Fed does not need to accelerate monetary policy tightening, said Michael Reynolds, vice president of investment strategy at Glenmede. This means that the outlook for cryptocurrency may be a little better.
Currently, holding assets in cash becomes more attractive when the Fed raises interest rates. We expect that selling digital assets may earn some profit.
cryptocurrency proponents have long argued that Bitcoin and other digital assets, due to their characteristics, can act as a hedge against fluctuations in other areas of the financial market.
According to them, gold-like Bitcoin is a limited quantity that needs to be exploited and its value depends on market demand. The BTC can only create a limit of 21 million digital token units.
It is too early to recognize the ability to fight inflation
Mr. Cam Harvey - a professor at Duke University and a partner at investment strategy company Research Affiliates - has long said that Bitcoin is operating too much like a speculative and periodic asset.
Bitcoin's ability to improve buyer profits and reduce volatility in the long term has not been proven.
In fact, this currency is very sensitive to market disruption and fluctuations. Bitcoin's value fell more than 80% in December 2017, "evaporated" 50% in March 2020 and continued to lose 53% in May 2021.
In addition, the Bitcoin shark investor team is known for its ability to manipulate prices by selling or buying in large quantities. This means that the BTC can be controlled by speculative forces, not just the law of supply and demand.
The legality is also an important factor that shakes the value of this digital currency. Currently, Bitcoin is not recognized as a legal form of payment in many countries, including Vietnam.
Even the central banks of many countries are tightening control of Bitcoin and other cryptocurrencies. The two main reasons given are that cryptocurrencies affect economic order and have a negative impact on the environment due to the huge excavation of coin-based power sources.
