IS BITCOIN'S SHORT-TERM DOWNGRADE SIGNAL A WEAK ARGUMENT?

2020 has been a year of reckoning for Bitcoin, the world's largest digital asset now able to take part in talks about traditional macro assets.

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After recession worries surfaced at the start of the year, Bitcoin rallied shortly before the market collapse in March toppled most global financial markets, including the cryptocurrency market. However, Bitcoin soon became one of the first asset classes to return within a 30-day period. 

The price of BTC has been driven by a bullish trend, along with liquidity and halving, and has made investors more vocal about treating Bitcoin as a hedge against inflation risk.

Now, according to Messari's recent publications, when Bitcoin reaches its next acceptance phase, it will have to understand how cryptos can relate to other assets under these new-found macro features

Without misjudging the significance of the split, Messari's Qiao Wang suggested that the event created more noise because the reduction in supply was insignificant relative to the volume of trade produced.

Once well-known hedge fund managers like Paul Tudor Jones went public and indicated that Wall Street could witness the birth of a new store of value, the main signal of macro features seemed adequate. He also added that a small percentage of his assets were in Bitcoin.

Such remarks by Jones underscored the adequacy of Bitcoin since early 2020, not just the rally that took place just before it halved.

With a trillion-dollar stimulus that the Federal Reserve will offset the credit contraction in the economy, Qiao hopes it will have a positive wealth effect on Bitcoin.

The post therefore suggested that short-term downgrade concerns for Bitcoin were fairly low.

In the past, market investors and traders could only express their interest in Bitcoin by trading in the spot market, but the playing fields have now changed. Now firms have options to hedge or speculate. They are capable of trading a derivative rather than the underlying ones, so they can express both positive and negative views on bitcoin's price movement.

With increased corporate participation in the field, once Bitcoin leaves the current correction phase, the asset could finish the year at a range of more than $ 13,800, the annual high of 2019.


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