Big buyers on board Bitcoin
The recent adoption of Bitcoin by several companies and investment firms has greatly inflated Bitcoin prices, with BTC’s market capitalization reaching $ 1 trillion on Friday.
However, Bitcoin is still a long way from becoming a conventional investment asset, bringing risks of overvaluation and price volatility, according to several investment advisory companies.
Several company announcements about buying BTC or plans to offer greater adoption of the cryptocurrency have dramatically changed the dynamics of the short-term market, with Bitcoin prices rising by around 90% so far in 2021.
International investment management giant BlackRock, Inc. “has started to get a little bit involved” with Bitcoin, said Rick Rieder, director of global fixed income investments and head of BlackRock’s global allocation team.
People are looking for a store of value or investment assets that could appreciate under the circumstances of high inflation and debt, Rieder said recently.
Mastercard Incorporated will begin supporting selected cryptocurrencies directly on its network in 2021 to offer more options to its customers, the global provider of payment technology solutions recently said.
Previously, Visa, another global payment technology company, announced its partnership with First Boulevard, a neo-bank focused on the African American community, to develop cryptographic application programming interfaces to allow customers to buy, custody and trade digital assets .
In addition, investment firm BNY Mellon Corp. recently announced the formation of a digital assets unit to accelerate the development of solutions and resources to help customers meet needs related to digital assets, including cryptocurrencies.
Notably, electric vehicle maker Tesla’s announcement on February 8 about buying $ 1.5 billion in Bitcoin, equal to 8 percent of its corporate cash reserves, and its intention to accept Bitcoin as payment for its products. in the near future it has triggered Bitcoin price increases since then.
Tesla’s announcement “abruptly changed Bitcoin’s short-term trajectory, reinforcing speculative flows and helping Bitcoin to exceed $ 40,000,” said J.P. Morgan in a report on Friday.
If the price of Bitcoin does not exceed $ 40,000, its momentum signals will continue to decline until the end of March, inducing a further setback by momentum traders, but “the opposite is happening now,” said J.P. Morgan analysts.
A widely shared report speculating that Apple could be the next to adopt Bitcoin in its Wallet app also contributed to Bitcoin’s growth momentum, according to a recent research note by Swiss banking giant UBS AG.