What makes the current run-up different than four years ago is a wider belief that Bitcoin
will develop into mainstream asset class and the backing of big investors, such as Paul Tudor Jones and Stan Druckenmiller. Crypto proponents argue that volatility is bound to eventually decline as demand broadens from speculators to long-term buyers, citing Tesla Inc.’s $1.5 billion purchase as one example.
“Bitcoin is on a nascent journey to becoming an established asset class,” said Paolo Ardoino, chief technology officer at cryptocurrency exchange Bitfinex in London.
Bitcoin, the largest cryptocurrency, has more than quadrupled in the past year and is close to breaching $50,000 for the first time. The market is designed to have a fixed supply of 21 million coins, which has drawn comparisons with gold.
The token’s swings are picking up at the moment, but eventually the market will calm down, said Mike McGlone, a commodity strategist at Bloomberg Intelligence. “Tesla allocations are a key iteration of Bitcoin going mainstream, which will pressure volatility toward that of gold and potentially, eventually below,” he said.
“Any investor that is short-term focused and worried about volatility should probably avoid Bitcoin if he wants to avoid sleepless nights,” said PwC’s Hong Kong-based Global Crypto Leader Henri Arslanian.
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