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This time it may well be different. The economic ripples caused by the rock of COVID are setting up an interesting year for traders in 2021. We have seen Bitcoin add $3000 to its price in the past 24 hours as more investors pile into the digital currency.

Part of this is being driven by more institutional money flowing into the asset class, and traders seeking an effective and uncorrelated hedge against choppy economic waters in January.

Bitcoin’s rise has also been mirrored by the rise of other digital currencies, like Ethereum (ETH), also up 10% in 24 hours. Bitcoin itself now ranks as the 13th largest asset class by market cap, according to AssetDash. It’s market cap has blown through $400bn, making it almost as big as Walmart.

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The recent news of Ruffer IC, the prominent investment manager, diversifying into Bitcoin is certainly contributing to this move and will only serve to pave the way for more institutional investment into digital assets. A recent survey by Bank of America has indicated that one of the most common trades among hedge funds is to buy Bitcoin and sell the US dollar, which should provide continued support.

“While $20,000 is just a number, the real story is that it has only taken 12 years for Bitcoin to become a generally accepted financial asset,” observed Matteo Dante Perruccio, President of International at Wave Financial Group. “It is clear that increasingly investors are embracing Bitcoin as an efficient inflation hedge and either a substitute for or compliment to gold. Whether mainstream retail adoption ever really takes place, there continues to be a strong argument for Bitcoin being seen as not only a legitimate store of value, but an inflation hedge during times of economic uncertainty.”

Bitcoin likely to have another record breaking year in 2021

Bitcoin is likely to have another record-breaking year in 2021, with prices expected to rise 50% and possibly double with its current momentum, believes the boss of one of the world’s largest independent financial advisory and fintech organisations.

“It’s a major milestone for Bitcoin and I doubt that we’re at the end of the current, historic bull-run,” said Nigel Green, CEO of deVere Group. “All financial markets experience peaks and troughs – both of which, of course, can benefit investors – and the cryptocurrency market is no different. Inevitably, we will soon see some pullback on prices and more volatility as traders sell Bitcoin at record high prices. This is especially true as the market is heavily influenced by so-called ‘whales’, major investors who hold lots of the digital currency and can therefore have a major impact on prices when they buy or offload.”

As Bitcoin surged past $20,000 for the first time just after 1 pm on the deVere Crypto exchange app on Wednesday, Green noted that as some of the world’s biggest institutions – amongst them multinational payment companies and Wall Street giants – “pile ever more into crypto, bringing with them their enormous expertise and capital, this in turn, swells consumer interest.”

As governments continue to support economies and increase spending due to the pandemic, investors are increasingly going to look to Bitcoin as a hedge against the legitimate inflation concern. The inherent traits of cryptocurrencies are also making them more popular with investors, and more widespread in their use.

According to Green at deVere: “These characteristics include that they’re borderless, making them perfectly suited to a globalised world of commerce, trade, and people; that they are digital, making them an ideal match to the increasing digitalization of our world; and that demographics are on the side of cryptocurrencies as younger people are more likely to embrace them than older generations.”


Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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