As the leader of crypto exchange Kraken, Jesse Powell is bound to be bullish on Bitcoin. Yet he’s projecting a disruptive future that would stretch the imagination of even the most ardent crypto fans. In a Bloomberg Television interview, Powell said Bitcoin could reach $1 million in the next decade, adding that supporters say it could eventually replace all of the major fiat currencies.
Bitcoin emerged from the scars of the 2008 financial crisis as distrust in governments and central banks inspired the digital currency to thrive outside the establishment. Unlike traditional currencies backed by sovereign credit and taxing authority, Bitcoin has no equivalent support. This push for monetary independence found early adopters in those that wanted to transact anonymously. Then with time, it captured broader investor interest. Yesterday, Tesla announced that it has bought $1.5 billion of bitcoin, which it plans to accept as payment.
Many investors believe that bitcoin and the technology behind it, blockchain, will reshape the global financial markets. Even though the cryptocurrency market is still in its infancy, demand is growing from investors who wish to buy into an emerging asset class. Accordingly, since bitcoin is still not widely used as a form of digital money for consumption purposes, from an investment standpoint, its main benefit is as a long-term investment into a future asset category. (Full disclosure: Author owns bitcoin and other cryptocurrencies in a retirement account.)
The SARS-CoV-2 coronavirus pandemic has left a significant footprint on the global economy. For this reason, it had a substantial impact on the behavior of all financial instruments, including cryptocurrencies. It turns out that the fluctuations experienced by the virtual currency market during this period reflect changes in other capital and commodity markets. This market has also shown relative stability during this difficult time. It is another proof that cryptocurrencies can be treated as a mature and full-fledged financial instrument.
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