With bond yields close to zero and most of the world's central banks "releasing water", investors have to look for new wealth storage tools, and the hot cryptocurrency Bitcoin has become the focus of attention.
Qiaoshui, the world's largest hedge fund company, recently released a research paper that discussed in detail the development path of Bitcoin as a store of value.
However, even if it is as strong as bridge water, there is no confidence in predicting the future of Bitcoin.
The attraction of Bitcoin
Although Bitcoin has attractive properties such as limited supply and global convertibility, Qiaosi will remain neutral due to its high volatility, regulatory uncertainty and operational restrictions.
However, Redalio, the founder of Qiaoshui, still called Bitcoin "a great invention."
In the report, Qiaosi pointed out that the limited supply made Bitcoin particularly attractive at a time when the central bank was printing money.
Like gold, Bitcoin has limited use as a medium for the direct exchange of goods and services. Bitcoin, like gold, provides a stable and limited circulation and cannot be devalued by central bank printing.
The total supply of Bitcoin is fixed at 21 million bitcoins, and the release speed is automatically halved every few years. Although Bitcoin initially had a much higher issuance rate a few years ago, its supply is now growing at a slower rate than gold.
In addition, Bitcoin is universal and easy to carry, making it a powerful stored value of wealth.
Bitcoin is easier to exchange than other traditional wealth stores, such as gold, art and real estate, especially for individual holders; geographically, with the popularity of Bitcoin exchange services around the world, Bitcoin can be realized relatively easily in most parts of the world.
However, the report also points out that scarcity alone is not enough to drive demand for an asset, nor is it sufficient to maintain it as a viable store of value.
Previously, Dalio mentioned in a recent article on Bitcoin that although the supply of Bitcoin is limited, there is no limit to the supply of digital money. the supply of assets like Bitcoin should affect the prices of Bitcoin and other cryptocurrencies, and new and better digital currencies may emerge in the future.
Bitcoin's relatively long history, much larger scale and wider recognition and acceptance give it a clear advantage, at least so far, according to the report's analysis.
As for when to invest in Bitcoin, Qiaosi believes that acceptance of Bitcoin institutions has slowed due to volatility, regulatory uncertainty and still immature infrastructure.
Judging from the recent increase in private sector participation, it seems that a large proportion of people are still using Bitcoin for short-term speculative trading rather than as an actual long-term savings tool, according to Bridgewater Analysis.
If the fundamental purpose of wealth storage is to preserve or increase your purchasing power over a long period of time, then we think that Bitcoin is more like an option-it is still a highly volatile and speculative asset, compared with a mature store of value. Bitcoin has not yet been widely used as a savings tool or reserve asset, and the government or the world's largest institutional allocator has not been meaningfully involved.
Bitcoin's high turnover may reflect its relatively more speculative nature than gold. Gold trading volume as a percentage of total liquidity is small, in part because central banks around the world hold a large share of total gold supply as a long-term store of value in their reserves.
At present, the pricing of Bitcoin options for future earnings fluctuates widely and is very optimistic. Discounting the rapidly rising price is a typical behavior of Bubble, which further shows that the speculative nature of the Bitcoin market is still very strong.
Qiaoshui believes that whether Bitcoin will be adopted by large institutional investors in the future will ultimately depend on regulation. The regulatory outlook for Bitcoin is highly uncertain.
The US Treasury Secretary said at an online event organized by the New York Times that trading with bitcoin was an "extremely inefficient way" to deal with these exchanges with astonishing energy consumption.
Speaking of Bitcoin, Christina, president of the European Central Bank, pointed out that it is a highly speculative asset, it has carried out some condemned money laundering, and the need for regulation is an issue that needs to be agreed on around the world. because if there are loopholes, they will be exploited by illegals.
The main concern for Qiaoshui is that if there are a large number of central bank digital currencies as officially approved digital stores of wealth in the future, governments may be more willing to limit the competition brought about by Bitcoin as a non-governmental alternative.
In addition, while tighter regulation may help Bitcoin gain wider institutional acceptance, it could also prompt some large holders of Bitcoin to sell because they want assets not to be subject to public scrutiny.
