Bull vs. Bear: Bitcoin’s Peak Moment

Since the black swan event on March 12, Bitcoin has emerged from its darkest hour and started to run wildly.

But when Bitcoin is getting close to its former peak, it shows hesitation.

Although there have been pullbacks before, the market still believes that bulls far outweigh bears. In the past, Chain Tea House also analyzed Bitcoin and the entire cryptocurrency market in previous articles and came to a bullish conclusion.

Bitcoin is at its peak right now, and it is the critical juncture of the battle between bulls and bears.

The situation began to become unclear and complicated.

Because according to Bitcoin's past performance, after a big rise, there will inevitably be a cyclical big drop, and then a long correction, until sufficient energy is accumulated to start a new round of big rise.

If the timeline can be extended arbitrarily, then today's bullish and bearish views are both correct, and there will be countless bull and bear markets in the future.

But what we want to discuss is the next direction of Bitcoin. Although this is difficult——

After all, "the deepest path I have ever walked is the routine of Bitcoin."

Big Inflation and Grayscale Bull

We need to first review what is supporting this round of continued rise in Bitcoin.

The most fundamental driving force is that we are in an era of hyperinflation.

Due to the impact of the epidemic this year, the Federal Reserve began to print money crazily, and major central banks around the world followed suit. The benchmark interest rates were close to zero or even negative.

And as the epidemic is likely to accompany us for a long time, the over-issuance of currency will continue or even intensify. Under the flood of money, various financial products will of course rise in response, and Bitcoin and encrypted assets are no exception.

But this can only explain why Bitcoin is rising, but it cannot explain why it is rising so sharply. The direct driver of this bull market is the entry of traditional financial institutions, especially the Grayscale Fund.

The continuous increase in holdings by Grayscale Fund not only drove the rise of Bitcoin, but also released great confidence in Bitcoin to the outside world.

It is worth noting that Grayscale does not invest itself, but helps institutional investors and secondary market investors issue securities.

Therefore, this wave of market trend was even named "Grayscale Bull", and the holdings of Grayscale Fund have also become a weather vane of the cryptocurrency market.

What's more, the crypto assets such as Bitcoin and Ethereum purchased by Grayscale Fund have a lock-up period of 6 to 12 months.

The financial institutions that have entered the market include not only Grayscale Fund, but also financial institutions from all over the world such as MicroStrategy, Square, SBI, Pendal Group, etc., with varying degrees of entry.

PayPal - Connecting Ordinary People

If the rise of Bitcoin in the past was driven by central banks and institutions, then the future short-term benefits of Bitcoin will depend on PayPal.

PayPal announced a few days ago that it would enter the cryptocurrency field.

In the coming weeks, U.S. users will be able to use their PayPal accounts to trade in Bitcoin, Ethereum, Litecoin, and Bitcoin Cash (BCH).

Users will also be able to use these cryptocurrencies to purchase goods at 28 million merchants in the PayPal network.

As a global payment giant with 350 million active users, PayPal's entry is undoubtedly a turning point - opening the door for mainstream people to enter the world of cryptocurrency.

If the entry of Grayscale Fund is already an established fact, then Paypal, which has not yet entered, may continue to lead the market in the future.

PayPal — Connecting 350 million users

If the rise of Bitcoin in the past was driven by central banks and institutions, then the future short-term benefits of Bitcoin will depend on PayPal.

PayPal announced a few days ago that it would enter the cryptocurrency field.

In the coming weeks, U.S. users will be able to use their PayPal accounts to trade in Bitcoin, Ethereum, Litecoin, and Bitcoin Cash (BCH).

Users will also be able to use these cryptocurrencies to purchase goods at 28 million merchants in the PayPal network.

As a global payment giant with 350 million active users, PayPal's entry is undoubtedly a turning point - opening the door for mainstream people to enter the world of cryptocurrency.

If the entry of Grayscale Fund is already an established fact, then Paypal, which has not yet entered, may continue to lead the market in the future.

But for investors, price fluctuations are inevitable, and the rise of Bitcoin does not mean there is no risk.

In a market full of randomness and uncertainty, investors should be respectful and cautious in order to benefit from market volatility.

Therefore, it is crucial to do a good job of asset hedging.

For example, hedging between different currencies, hedging between long-term and short-term, etc. In short, asset allocation should be carried out, and the investment portfolio should be determined based on risk preference and investment cycle.

After all, those who make a living from crystal balls are doomed to eat broken glass.