Since reaching a record high of $69,000 earlier this month, Bitcoin (BTC) has been on a downward trend. BTC, on the other hand, has risen over $57,000 following a lackluster week, earning almost 5% in the last 24 hours.
Bitcoin (BTC) and COVID-19
It’s worth noting that Bitcoin did not back the overall market’s decline as feelings cooled following the announcement of a new covid version, Omicron.
“The continuing argument on what sort of asset crypto and Bitcoin will prove to be, whether it’s an inflation hedge and volatility hedge, or whether it’s just like a high beta risk asset,” Ross Mayfield, Baird’s investment strategist, said to Bloomberg.
The Bitcoin-market correlation has transformed, according to Avil Felman of BlockTower, with more hedge funds and institutional investors allocating the asset class. He fingered out that macro forces did not weigh Bitcoin down as heavily as they do now until 2020. “Market makers will often hedge not with the precise asset they’re seeking to hedge against, but with a basket of assets,” Felman said. As a result, they reaffirm those connections.”
This early means that traditional funds’ portfolios include equities as well as other asset classes. When their balance sheet starts to move south, these funds start looking at Bitcoin to risk-off, according to Felman.
“Bitcoin is an anchor asset”
As a result, Felman believes that Bitcoin will become a traditional asset, similar to stocks, in a few years to come. He explained that “I believe [Bitcoin’s] impact on the whole market will become somewhat separated in two years.” The relationships will undoubtedly fall apart.”
Bitcoin (BTC) with the Internet of Things (IoT)
However, sectors of the crypto world are already displaying signs of “decoupling.” Felman believes the metaverse is a fantastic illustration of this, as several initiatives such as SAND and AVAX have seen increasing traction despite Bitcoin’s recent slump.
This could, however, be due to preparation that the metaverse could become a trillion-dollar industry by next year. What about Bitcoin, though?
According to a poll, 41% of global respondents believe Bitcoin is more trustworthy than their national currency. Despite a 5% drop in Bitcoin, weekly inflows into financial products averaged $94.4 million in November.
“Now we’re a trillion-dollar asset we need,” Felman remarked. For Bitcoin to rise, we need pension funds, endowments, states, and other institutional investors to start investing.
Bitcoin will not be traded in a well-defined one- to a two-year cycle, but rather as a macro asset, according to Felman. It’s worth mentioning that the asset today has a different set of market participants than in the past. After a few years, Bitcoin may not experience the same volatility and downfall it had previously.
On the back of soaring inflation, Robert Kiyosaki, author and investor of Rich Dad, Poor Dad, is accumulating more Bitcoin, among other assets.
@therealkiyosaki on November 24th on Twitter stated that “The Dollar Tree has been renamed the $1.25 Tree. Inflation is a form of taxation imposed on the poor and middle classes. Inflation increases the wealth of the wealthy. Get a head start. Become wealthier. I’m increasing my gold, silver, Bitcoin, Ethereum, rental property, and oil purchases. What are you planning to purchase?”