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Editor’s Note: The following is a transcript of the accompanying video. © 2020 Thomson Reuters.
Bitcoin is back. It rose to the pinnacle of its all-time high in 2017, and supporters hope there is less chance of an accident this time around. But it hasn’t made it to the mainstream yet, and analysts say bitcoin is still far from a safe bet.
Reuters cryptocurrency correspondent Tom Wilson: “Even though we have seen some big companies like PayPal or Facebook embrace digital currency technology, bitcoin, other cryptocurrencies, bitcoin is still very much on the sidelines for many large investors. Ai Pension funds don’t like it very much. Big asset managers don’t like it very much. And that’s because there are still a lot of associated risks. “
Bitcoin is up 160% this year. The steep trajectory of its rally echoes that of 2017, when a retail-driven buying spree drove it to nearly $ 20,000, only to a drop of more than 50% a month later. But 2020 isn’t the Wild West it was three years ago.
[Wilson said]: “Bitcoin fans say this rally is different from the 2017 bubble. This is because the structure of the bitcoin markets has changed quite considerably. Now, there are larger investors involved in the space instead of the vast majority of retail investors. Allo. at the same time, there are more sophisticated derivatives markets so that investors can hedge their positions and also a wider variety of custody services so that investors can safely store their digital currencies. “It is easier for professional investors to seek exposure to cryptocurrencies these days. Their involvement, it is argued, could lead to greater liquidity and less volatility. With the evolution of regulation, big names are entering the market.
Bitcoin is also benefiting from an increased appetite for riskier assets, following government and central bank stimulus measures to combat recessions. However, despite all the improvements, it remains highly volatile. The sector is still opaque, trade data remains patchy, and concerns about market manipulation are widespread. 2020 could be just another bitcoin bubble, waiting to burst.
