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Bitcoin, the darling of new-age investors and a synonym for wealth, is often seen today: "If you bought Bitcoin ten years ago, you would have achieved financial freedom now." This is not groundless, because Bitcoin has seen an astonishing increase in recent years.
From the initial $0.003 to $20,000 at its peak, it has managed to increase the return on investment to tens of millions of times. In front of Bitcoin, any investment is weak.
So why has the price of Bitcoin been rising so fast? What is the reason? Everyone has their own opinion on this question.
Demand is growing, and the story of "energy increase" is deeply rooted in people's hearts
Many people like to ask this question, "How many bitcoins are left to be mined?"
According to relevant data, on October 19, the 18 millionth BTC was mined. The current circulating supply of BTC is 18,000,025, which means that there are still 3 million left to be mined.
Moreover, the BTC block reward is expected to be halved on May 14, 2020, when the block reward will be reduced from the current 12.5 to 6.25. There are currently about 208 days left until the reward is halved.
This also means that the world’s first cryptocurrency will be one step closer to its hard-coded cap of 21 million coins. In other words, if you don’t buy it now, you will not be able to buy it.
Moreover, investors have always been very fond of Bitcoin. Some people even regard it as a belief, and the story that it can "rise" is deeply rooted in people's hearts.
In fact, there are two entrances to the story of "energy increase", one is called "demand growth" and the other is called "less and less".
The "Less and Less" entrance is actually aimed at mining, because the "Less and Less" story entrance has a prerequisite called "people who hold it are unwilling to sell it", so the total amount is limited, the more you mine, the less it becomes, the fewer coins are mined in the market and the more people buy them, doesn't it mean - "it can rise"?
Can arouse people's desire and imagination
Everyone who plays the stock market knows that there is a saying in the stock market, "The subject matter is the primary productive force."
In fact, the same applies to other investment and speculation fields.
What does subject matter mean? To put it simply, it is an excuse to trick others into buying in.
For example, before 2008, real estate developers would "trick" ordinary people into buying houses by saying "only if you buy a house will the mother-in-law agree to marry her daughter to you." After 2008, the reason changed to "buying a house is a way to hedge against inflation and preserve value." After 2014, the reason changed to "except for houses, you can't make money through other channels."
There is no doubt that the theme of Bitcoin, or the reason for hype, is more scarce, making people who participate in investment and speculation feel that Bitcoin is the next generation of electronic currency, and investing in Bitcoin is investing in the future.
At the same time, Bitcoin is also linked to appreciation, preservation of value and anti-inflation. The constant issuance of Bitcoin is used to make each buyer believe that Bitcoin will become more and more valuable and more valuable than real currency, so they can buy it boldly.
Anyway, the most important function of the subject matter is to attract (trick) people into buying in, and the subject matter of Bitcoin can arouse people's desires and imagination.
Monetary policies and quantitative easing policies of various countries
In addition to the two biggest reasons mentioned above, I believe the biggest reason is the monetary policies and quantitative easing policies of various countries.
What actions did central banks around the world take after the financial crisis at the end of 2008?
From 2008 to 2009, after the bankruptcy of Lehman Brothers, the Federal Reserve rescued the market as the "lender of last resort" and decided to purchase $300 billion in long-term Treasury bonds and acquire a large number of mortgages and loans. During this stage, the Federal Reserve directly intervened in the market, directly provided funds to troubled companies, and released liquidity directly to the market as an intermediary. At that time, central banks of other countries also made unexpected decisions.
The goal of quantitative easing is long-term low interest rates, and the central bank continues to inject liquidity into the banking system and inject a large amount of money into the market. Many central banks maintain financial markets by purchasing a large amount of bonds, and investors are eager to find new sources!
Over the years, interest rates have been reduced to very low, which means that the cost of borrowing is also very low. Many people go to loans to buy houses, and the remaining funds also hope to seek more profits. Ten years ago, savings in bank deposits could bring 6%-7% interest per year, and in the past 10 years, the interest has gradually dropped to zero, which actually created a lot of demand.
The result is that people flock to the city, pushing up housing prices. The city does not have much space, supply and demand are tight, and housing prices are rising. However, a large number of scattered small funds cannot meet investment demand. When the demand increases, the price of a Bitcoin that can be invested will naturally rise. (Maitian Finance) |
