Is it time to review cryptocurrency holdings?

At the time of this writing, Bitcoin was approaching a new high of $ 20,000 USD per bitcoin. What has changed since this maximum was last reached?

Crazy covid

The Covid19 situation has changed the way people do many things. Technology has come to the forefront of everyday life. Things that used to be done physically are now being introduced into the virtual world: education, restaurant food, entertainment, work, and the purchase of many goods and services. The natural fit to this type of agenda is the use of cryptocurrencies. Why? They are an extension of the technology-driven world. They can also be used to compete with the existing financial system at potentially lower cost.

Acceptance

The last time Bitcoin reached its record high, many institutions were demonizing cryptocurrencies as payment methods used by criminals for terrorism, money laundering, and the sale of illicit drugs. Right now, Mastercard and Visa are linking cryptocurrencies to their credit cards, and Paypal now accepts Bitcoin for use on its platform. Many governments are talking about issuing cryptocurrency versions of their traditional currencies. There was also a push from Facebook associated with major banks and other institutions to issue a cryptocurrency called Libra that didn’t get very far, but the intention is there. Cryptocurrencies are no longer for criminals unless the aforementioned institutions are committing the crimes.

Adoption

The key to any technology is mass or widespread adoption. The more people use something, the greater the demand for its use and the more important it will become. With widespread adoption, the systems that work alongside the product are also beginning to change. Look at Apple’s iPod, Microsoft Windows, ISPs, and electric cars for examples. With the new demand will come new industries and complementary products that were not very useful without the adoption of the original product.

Vulnerability of traditional investments

Due to the Covid scenario and the developing depression, investing in stocks and bonds is becoming quite expensive and carries increased risk as the underlying economy is disconnected from the performance of these markets. The high level of debt makes real estate investing more risky than in the past, as well as the volatility of rental income and the ability of people to pay their mortgages. Cash is a safe haven, but rising debt and the outlook for inflation mean that cash has risks, too. The concept of diversification means that these investments need to be maintained to some extent, but now there is a yearning for an asset that complements these products. This new asset is cryptocurrencies. This product allows the diversification of excessive debt, currency devaluation and high inflation.