There is currently a lot of uncertainty in the stock market. The latest wave of the COVID-19 pandemic is causing new rounds of shutdowns around the world. Despite widespread acceptance of the US election results, troubling undercurrents reveal a substantial minority who have so far refused to recognize the normal succession of power. While some companies are well prepared for volatility, others have exhausted their safety margins and are against it.
It is therefore not surprising to see the stock markets give way on Friday. But what’s interesting is that investors looking for an alternative have decided that bitcoin could be the answer. So far, the cryptocurrency market has risen to the challenge, but can bitcoin prices continue to soar? Despite widespread cynicism about crypto tokens, many leading investors believe the answer to this question is yes.
How the market behaved on Friday
For much of Friday’s session, the stock market held up well. But towards the end of the day, the major market benchmarks gave ground. This led to losses for the Dow Jones Industrial Average (DJINDICES: ^ DJI), S&P 500 (SNPINDEX: ^ GSPC), and Nasdaq composite (NASDAQINDEX: ^ IXIC), although they were all modest at 0.75% or less.
Friday Stock Exchange
Percent change (decline)
Bitcoin is approaching new highs
Even though the stock market fell, bitcoin continued its incredible ascent. The price of the first crypto token hit $ 10,000 as recently as early September, but since then it has risen 85%. Over the past month, bitcoin prices have risen by more than half, and the price of around $ 18,500 on Friday afternoon was its best since it climbed to nearly $ 20,000 in late 2017.
Already, bitcoin has eclipsed some of its old records. Due to the amount of cryptocurrency mined over the past three years, the total available bitcoin market cap has never been higher. The amount of bitcoin held in the Bitcoin Trust in Grayscale (OTC: GBTC) is at all-time highs, as is open interest on bitcoin futures and options.
Some of these gains came as institutions entered the market. Institutional investors invest a lot of money in cryptocurrencies. Square (NYSE: SQ) recently spent $ 50 million on bitcoin.
Yet there is another metric that speaks more broadly to bitcoin adoption: The number of wallet addresses with a bitcoin balance of $ 10 or more has never been higher, according to Coindesk. Also, this probably doesn’t include those who have an interest in cryptocurrencies through services like Robinhood and PayPal funds (NASDAQ: PYPL)because they do not support separate wallets that allow investors to keep their bitcoins and other crypto holdings.
The easy wins are already here
With all the uncertainty surrounding the election, the economy, and the pandemic, Bitcoin’s decision to challenge its old records has been as easy as it ever would be. In fact, if bitcoin did not have made this move, it would essentially have shown investors that the cryptocurrency was not suitable for the purposes for which most investors held it.
Now, however, the big question is what will happen next. There are a lot of outlandish calls for bitcoin to hit $ 100,000 or even $ 1 million per token in the not too distant future. Meanwhile, others believe the price could stay near current levels for a while, while still others predict another of Bitcoin’s infamous 80% to 90% drops to let new investors hold the bag. . Just as the stock market is volatile, bitcoin investors should expect big ups and downs going forward.
Still, investors looking for an alternative to the stock market might not get everything they need by investing in bitcoin. Although some newer bitcoin lending services offer interest on bitcoin holdings, cryptocurrencies held in traditional wallets do not generate income. Those seeking growth must rely on price appreciation. And while the long-term trend is up, there have been long stretches when selling bitcoin for cash would have been a painful decision.
Keep your eyes on Bitcoin
Investing in stocks is still a great way to generate long-term wealth, even when there is uncertainty. After more than a decade of mavericks predicting Bitcoin would come to naught, the cryptocurrency bulls have had the last laugh. It’s definitely not something you should be betting your whole life on, but bitcoin and other cryptocurrencies are likely to stick around – no matter what happens to their prices in the weeks and months to come.