Bitcoin has been a wonderful digital currency since it was invented and has been the most sought cryptocurrency since then. The BTC crypto offers several benefits and thus most people want to own Bitcoin. Currently, the investors view Bitcoin as the “digital gold” and it can be used as a digital form of fiat currency.
The investors believe that the cryptocurrency will grow enormously over time as the supply is fixed unlike the fiat currency supply. The Bitcoin supply is capped at just under 21 million coins. On the contrary of digital gold, the central-bank-controlled fiat currencies can be printed at the politicians’ will. Alongside there are several investors who are looking forward to Bitcoin price hike with the fiat currency depreciation.
However, things were not that smooth as it is today and there has been a major dramatic shift in the way investors perceive BTC now. Bitcoin has subsequently gone through the analysis of famous Bitcoin critics to stand at a point it is now.
In What Way Investors View Bitcoin Then Vs Now?
Well, the way investors view Bitcoin today has come a long way from what it was initially seen. If you consider BTC to INR, you will see the dip and rise in the variations. Also, you can do a bit of research on the dramatic shift to get a clearer view. Here we have an interview of Meltem Demirors (Coinshares Chief Strategy Officer) who discusses all aspects or rather all the ways of viewing Bitcoin then vs now.
Can you just briefly kind of explain some of the moves that we saw in Bitcoin and some of the other crypto stocks? Particularly as it relates to some of the chatter that we saw on Twitter and some of the other social platforms.
Absolutely. Hi Romaine. It’s been quite a week. Are you hanging in there? It’s Friday, yes, I am ready. So crypto markets are 24 X 7 X 365. I am so grateful that the traditional markets close at four. We punch the closing bell, we are done for the week. I hope so. Monday we get to start all over. Let me just briefly clarify for your listeners and viewers what is going on in the crypto space. So obviously going into the end of last year and going into the start of this year, we have seen a dramatic shift in the sentiment around Bitcoin. And at Coinshares we manage four billion dollars in assets on behalf of clients ranging from retail investors to institutional customers who are buying our exchange traded products and what we have seen is a dramatic shift in the way that people perceive cryptocurrencies.
In 2017, you know we have the first real crypto mania crypto frenzy. People did not know they were buying Amazon.com or pets.com. People were just buying coins without really much of a barometer for what they were getting and the landscape shifted dramatically as you have alluded to. We see people like Elon Musk or “Papa Musk”, as he has been dubbed by the Twitter crowd talking about Bitcoin. But more importantly, what happened yesterday that I think was a real shift is Ray Dalio of Bridgewater Associates published a 14-page research brief outlining his views on Bitcoin and the opening line was Bitcoin is a hell of an invention and so that really i think stimulated bullish sentiment as well as options markets in the bitcoin space. We had one of the largest experiences ever last night 3.3 billion in options settled and so that also contributed to bullish sentiment as the forward curve continues to be in contango.
You know within the Reddit chatter this week there is frustration of course when the brokerages were shutting down or limiting how much you could buy on certain stocks. Can you be confident that does not happen with crypto?
And look Taylor I think the challenge here is it is really not the crypto side that is constrained. It is the US dollar side. So the issue that robinhood has with their crypto trading that is also suffered by Coinbase and Gemini and Kraken and all the crypto trading platforms is people have to fund their accounts in order to buy cryptocurrencies and the way you fund your account is with the US dollars. Now, the US dollar, unfortunately, is part of the correspondent banking system and as you know, sending a wire is not instantaneous. There are limits on how much you can ACH or instantly deposit into these platforms. And so really the constraints we are seeing are on the cash side. The other point I want to make is that I want to just clarify, big misconception that people have. A lot of people believe there is a lot of leverage in the crypto market and this is actually not true at all. It is impossible to get margin. You can get leveraged products but there is no margin, there is no cash flow in the crypto space. So the big constraint here is really cash which is very expensive.
When we talk about the retail frenzy this week, obviously leverage was a big part of that with regards to equities. The other part was that the settlement, the learning of that there still is a settlement clearing issue which you sort of alluded to there with the crypto space here.
And I am wondering, given the fact that it is a obviously less centralized that what we get with equity trades and options trades, is there any sort of fear or risk that you see out there if you get so much volume coming in whether it is buying or selling that the various exchanges would not be able to handle it?
Yes, so again I think the big challenge on the exchange side and what is so fascinating is these exchanges are settling trades in real time for millions of customers on a day-to-day basis. The latest number is from Coinbase which is about to IPO via direct listing as they have 45 million customers. So that is a lot of folks on your platform. The issue here again is not really on the crypto side. Crypto to crypto venues are using the underlying blockchain as the layer to which they settle transactions and settlement happens with finality which does not happen in traditional securities. And so really it is a fundamental structural difference here.
The big change that I think will happen as we look at the way crypto markets operate and the efficiency we have there, I think there is a lot of talk about a digital dollar obviously there are numerous G20 economies which are exploring digitizing their currencies using blockchain technology that could potentially be interoperable with the Bitcoin network, the Ethereum network and other public blockchain networks. And so I think the big question that will emerge now is how do we migrate not the crypto space into legacy finance but is there an opportunity here to take what is happening in the traditional finance space and drag it into the future and digitize it and disintermediate it and distribute it in different ways using this technology.
With this we come to the end of the interview where the professional has clearly discussed what Bitcoin as a cryptocurrency meant to the investors back then and how the way investors view Bitcoin has subsequently transformed. She has also provided her Bitcoin expert opinion on the value. By the end you might have a question – is bitcoin a good investment 2021?