ZB Academy: Bitcoin will rise when defeating the next economic crisis, but altcoins may not be so
Since the price of Bitcoin is driven by inflows and volatility in the spot and derivatives markets, many investors and traders only make a profit. However, Bitcoin supremacists and some chain analysts believe that Bitcoin may become a successful alternative currency.
When Bitcoin is seen as an alternative currency, it is interesting how the narrative of altcoins focuses on alternatives to Bitcoin. Regardless of whether Bitcoin solves the economic crisis, it is important for retail traders to investigate before adding more of these assets to their portfolio. Smart money may flow out faster than it can be injected, but retail traders need to test the water first.
Bitcoin is actually a deflationary currency. Comparing it with fiat currency makes it an ideal hedging tool against inflation. However, Bitcoin is not completely different from legal tender, except that the price is controlled by demand and supply rather than monetary policy.
The correlation between Bitcoin and gold and the S&P 500 index is higher than at the beginning of the year. The one-year correlation is still negative or close to zero, but it has been climbing steadily in the past 10 months. Bitcoin has the highest return on investment.
Since 2015, Bitcoin’s performance has surpassed the top 5 index by 70 times. Although the growth of ROI this year is not so explosive, high ROI is not the only factor that will defeat the next financial crisis. Bitcoin’s exchange trading volume is currently below the peak of $550 million reached in July 2020.
However, the current decline in transaction volume has helped to create scarcity and drive increased demand. With the decline in trading volume, inflows to the exchange fell below the 180-day average and only started to rise in the past week. As institutions have developed an open interest in derivatives exchanges, the fundamentals of Bitcoin are now stronger. It may be sufficient to solve the next financial crisis. Although the price of Bitcoin may rise, this is not the case with altcoins. The financial crisis may cause the value of currencies with lower market capitalization to fall below the lowest price.
About ZB Group
ZB Group was founded in 2012 with the goal of providing leadership to the blockchain development space and today manages a network that includes digital assets exchanges, wallets, capital ventures, research institutes, and media. The Group’s flagship platform is ZB.com, the industry leading digital asset exchange. The platform launched in early 2013 and boasts one of the world’s largest trading communities.
ZB Group also includes ZBG the innovative crypto trading platform, and BW.com, the world’s first mining-pool based exchange. Other holdings include wallet leader BitBank, as well as exchange brands ZBM, ZBX and Korea’s Bithi.
Industry intelligence and standards are headed by the recently launched ZB Nexus who embody the core values of ZB Group and open-source their reports and analysis for the public.
Learn more about ZB Group by visiting www.zb.com.
