In the first quarter, the inflow of cryptocurrency funds reached a new high, and the self-breakthrough under the current global economy will continue!
A new report by the digital asset management company CoinShares shows that the monthly inflow of investment into cryptocurrency funds in the week from March 29 to April 4 rebounded from a five-month low to $106 million, a five-fold increase. In the previous week (March 22 to March 28), due to the horizontal price movement trading in Bitcoin and other digital asset markets that failed to motivate buyers, the inflow of funds was reduced to about $21 million, the lowest level since October last year. The rebound in trading volume brought the inflow of cryptocurrency funds to US$4.5 billion in the first quarter of this year, a record high, about 11% higher than the last quarter of 2020.
The inflow of cryptocurrency funds highlights the fact that the global economy is still at a relatively sluggish low level. Under the influence of many factors, funds cannot flow to the physical manufacturing industry and the traditional financial industry. The large inflow of funds from cryptocurrency funds is generally regarded as a self-breakthrough of the global economy. In the short term, this breakthrough will continue.
2021 global economic performance
From the perspective of the structure of the global economic recovery, the pace of vaccination in developed countries is ahead of developing countries outside of China. The pace of vaccination in the United States is ahead of developed countries in the European Union, and overall it still has a greater positive role in promoting economic recovery and boosting consumer confidence. With the gradual control of the epidemic in major overseas economies, the global economy has gradually entered the pace of recovery.
However, the limitations of vaccine production lines have slowed the economic recovery of the world’s major economies in a short period of time compared to Asian countries with better epidemic prevention. The main factors affecting the service industry, especially tourism, accommodation and catering, etc., affected by the epidemic have not completely dissipated. According to the World Bank’s forecast for 2021, the global economy has contracted by 4.4%. In March, the US non-agricultural sector added 916,000 jobs, and the unemployment rate fell to 6%. It was the “largest increase in the number of employed people” since August last year. In other words, the largest decrease in the unemployed. According to US media analysis, the continuous decline in the unemployment rate and the continuous increase in the employment population indicate that the US economy is slowly recovering. Morgan Stanley recently released a report that raised the forecast for US economic growth in 2021 to 8.1%.
In general, the global economy is improving as a whole, but in the short term, we still need to do our best to deal with the epidemic. The recovery of the manufacturing industry and the physical industry is still in a dormant state waiting to be restarted. The short-term “prosperity” caused by the quantitative stimulus of consumption in the US dollar can only be understood as the efficacy of a “special medicine”, and does not have long-term reference value.
Self-breakthrough of the global economy
When the global economy cannot continue to grow in traditional manufacturing and physical industries, its capital flows only to other industries that are less affected by the epidemic, such as the financial industry, the futures market, the Internet industry, and the blockchain industry. Among them, the digital asset field of the blockchain industry is less subject to regulatory impact, and the tax policy space for income and investment is larger and more favored by capital.
Therefore, from mid-2020 to early April 2021, the value of digital assets led by Bitcoin has increased by more than 300%. It can be said that this is an inevitable result of the global wealthy people’s thinking of capital allocation. The response in the digital asset trading market is that the value of Bitcoin has risen from less than US$10,000 in 2020 to around US$55,000 today, and hit a high of US$60,000 several times in March and April 2021.
While global capital is driving the inflow of funds into the cryptocurrency market, capital is also making self-breakthroughs. Large capitals led by Morgan Stanley and Goldman Sachs are also optimistic about the cryptocurrency market and are deploying blockchain and digital assets. Capital companies such as Tesla are also deploying digital assets.
The allocation of digital assets by global capital has caused the currency market to rise, and at the same time, digital assets have officially entered the global economic field. It has become another kind of “commodity” based on blockchain technology, and it is also the inevitable self-breakthrough of the economy in the process of global economic contraction.
