Connect with us

Crypto-Currency

Is Bitcoin The New Institutional-Grade Safe-Haven Asset?

Published

on

safe-haven asset

Is Bitcoin The New Institutional-Grade Safe-Haven Asset?

With the adverse effect of the covid-19 pandemic on the world economy, investors seek dependable safe-haven assets to protect the value of their funds. According to Michael Saylor, the Chief Executive Officer of MicroStrategy, Bitcoin is a compelling institutional-grade safe-haven asset. With its performance so far in 2021, Bitcoin is capable of attracting more mainstream investors.

Safe-haven asset

Since the third quarter of 2020, wall street institutions have been embracing crypto assets, especially bitcoin. The ongoing recent Bull Run has its roots in the massive embrace of these institutional investors. Online payment giant PayPal announced its support for bitcoin and other altcoins. Currently, people can trade bitcoin and some selected altcoins on the PayPal platform. 

Also Read: Bitcoin Lightning Network

Institutions like Greyscale, Microstrategy, Square, etc., all have invested heavily into bitcoin. Based on the ongoing adoption, there is a high chance that corporate firms will be completing their balance sheets with bitcoin in the future. Excess cash is becoming a drag on shareholders’ value in our current monetary system. Therefore, we should expect more institutional investors to embrace bitcoin as a treasury reserve asset. 

What Is A Safe-Haven Asset?

They are those assets that maintain their value, appreciate, or outperform when the financial market crash. However, a safe haven asset is not guaranteed to yield positive returns in every market dips. Investors seek safe-haven assets to limit their exposure to losses during a bear market. Safe-haven assets can vary depending on the particular down market. Therefore, to have a safe-haven asset, you need to perform ample due diligence. 

Investors diversify their portfolios using safe-haven investments. Such investments are beneficial in times of market volatility. Examples of safe-haven assets include Gold, Treasury bills (T-Bills), Defensive stocks (healthcare, utility, etc.), and cash. Although cash is considered the only true safe-haven during a market downturn, it offers no real return and is negatively impacted by inflation. 

Bitcoin is a Good Hedge Against Inflation 

The truth is, in a covid-19 stricken world, there is no such thing as a safe-haven investment. Everything is taking a hit, but certain investments are taking the hit less than the majority of the others. Bitcoin is arguably a good hedge against inflation; thus, it can be seen as a store of value. 

Read: Bitcoin Price Plunge: Is the crypto bubble about to burst?

In today’s monetary system, consumers need a currency that has the capacity to rise to keep up with inflation. Bitcoin helps to protect the holder’s purchasing power. According to JPMorgan Chase analysts, bitcoin will continue cementing itself as a hedge against inflation. In the long-term, this could edge out gold by driving more investment flows into bitcoin. 

Can Bitcoin Be Seen as a Safe-Haven Asset?

David Smooke, Founder and Chief Executive of Hacker Noon, believe that it will be irresponsible to see bitcoin as a safe-haven investment. According to Smooke, the shift in narrative around bitcoin has major implications, especially for the digital financial world’s future. 

He believes that bitcoin has some merit and more potential as a store-of-value asset. We are currently very early in the digital cash revolution; and as gold is the mascot for the current financial system, bitcoin is the mascot for the rise of digital cash. Bitcoin is unlikely to play the role of a transactional instrument that can be used for day-to-day purchases. 

Bitcoin can be the backup to omnipresent digital cash. However, it is currently inefficient to handle the volume of micro-transactions that the mass adoption cash system requires. Many people have come out to describe bitcoin as the “digital gold,” but is that really true? Well, no matter how much we would want to believe that, bitcoin is certainly not digital gold. 

Bitcoin does not have the speed competent enough to serve as a medium of exchange and no barrier to competitive entry. Gold is a physical element and the same as another precious element on the periodic table. Unless we have a new precious metal introduced to the periodic table, there is a real physical limit to competing with those precious metals. 

Related: Top Bitcoin Hardware wallets 

Although bitcoin is limited in terms of the number of tokens, it has no barrier to competition. This is the reason we have more than 50,000 cryptocurrencies. There is no doubt that bitcoin has a special place in the world of store-of-value assets. Like other store-of-value assets, bitcoin drives its value from the scarcity of supply. According to Anton Altement, Chief Executive of Osum.Finance, whether or not bitcoin will be considered a safe-haven asset, is dependent on public perception and narrative. To Altement, store-of-value is not an intrinsic quality of any of the things that society collectively agrees are valuable. 

Bitcoin Price Driving Institutional Investment 

Today, there are many bitcoin advocates from an institutional standpoint. We have top business leaders coming out to express their support and affirm the inherent potentials in bitcoin. Today, bitcoin is increasingly recognized as a hedge against inflation. The outstanding price-performance of bitcoin has reinforced the roles of these institutional advocates. 

The crypto asset touched an all-time high of above $40,000 on more than one occasion in the week. Some believe that bitcoin will record a price of $146,000 in the next decade. JPMorgan Chase analysts are one of the market experts who are certain BTC will hit that mark.

Conclusion  

Bitcoin is more of a store-of-value asset than a safe-haven asset, considering the market’s volatile nature. The potential of bitcoin is not in question. However, we need to exercise a little restraint on how we project the mascot to rise of digital cash (Bitcoin). 

 

Comments

comments

Visionary, and Passionate entrepreneur who believes that greatness lies not in what you see, rather, it depends majorly on how you see. I'm that diligent and determined guy that sees things very differently. Let's make a difference people.

Companies

What is Cryptocurrency And How Does It Work? 

Published

on

Obiex finance website

Cryptocurrencies are decentralized digital assets that operate on blockchain technology that in turn operates by storing a ledger of every transaction on all nodes powering the blockchain. 

In layman’s terms, blockchain technology is like a record keeper, it collects data (in blocks) and links one block of data to another, forming a chain. The data on the blockchain is open for all to see and cannot be easily altered. Blockchain technology can be used for a variety of use cases besides cryptocurrency, ranging from voting to crowdfunding, keeping health records, etc.

Using Bitcoin as an example, nodes are computers connected to the network to mine Bitcoin,  – this collection of independent nodes working together is what makes the network decentralized.

The decentralized nature of cryptocurrency is down to the creators recognizing flaws in traditional banking & financial systems like governments and financial institutions acting only in their best interests and not in the best interest of the common man, leading Satoshi Nakamoto (the creator of bitcoin and blockchain technology) to take steps to rectify that.

Related: What are NFTs?

To make cryptocurrency transactions, you will need to have a set of both public and private keys that will act as passwords protecting your crypto wallet. 

The Public key is connected to your wallet address, allowing you to share the address with others to receive cryptocurrency, while the private key is known to only you and is what you will use to approve outgoing crypto transactions from your wallet. 

Trading Cryptocurrency on Obiex

Obiex finance website

With the popularity of cryptocurrency trading currently at an all-time high, the biggest challenge for many rookie traders is selecting which cryptocurrency exchange to trade on.

If you fall in this category, the immediate priority should be finding an exchange that allows rookie traders to make trades easily, doesn’t charge extra fees and is completely secure. That exchange is Obiex Finance.

In this guide, you will be shown how to navigate the Obiex mobile app & website easily and what to do to get started with making cryptocurrency trades. 

Getting started with Obiex Finance 

Obiex Finance is a digital asset exchange and financial technology (Fintech) platform that gives its users the ability to easily execute cryptocurrency trades from anywhere regardless of their skill level.

Their commitment to ensuring that users get the best experience is shown in how they allow instant swaps from volatile coins like Bitcoin to stable coins like USDT, and vice versa, without confirmations. In a market where the value of crypto can fluctuate wildly, this feature is especially valuable as it allows users to seamlessly switch between making profits to saving those profits in a more stable currency before the value drops.  

To create an Obiex Finance account, simply head over to their homepage, click on “sign up”, fill in the required fields and verify your email address. After that, create wallet addresses for your crypto assets and you’re ready to start trading!

The cryptocurrency available for trading on the Obiex Finance platform are: Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), Polygon (MATIC), Dogecoin (DOGE), Tether (USDT), Binance USD (BUSD), and USD Coin (USDC).

Getting Started with Cryptocurrency trading

After creating your Obiex account, you need to follow these simple steps:

  1.     Have a Trading Strategy: Trading cryptocurrency without having a strategy in place is the easiest way to lose your money. You will need to research the various crypto trading strategies thoroughly and choose the one that best suits your needs and temperament. For example, if you’re a patient person who is content to make smaller, safer trades over a long period of time instead of making riskier trades, then scalp trading is the best trading strategy for you. There are also other crypto trading strategies such as Swing trading, position trading, Arbitrage, dollar cost averaging etc.
  2.     Pick the cryptocurrency you’d like to trade: There are several cryptocurrencies available on Obiex Finance such as Bitcoin, Ethereum, Binance Coin, Tether etc. Selecting which cryptocurrency to trade is usually down to making a choice; whether to stick with the safer, more established cryptocurrencies like Bitcoin or to go with the more volatile coins that have a high upside and an equally high-risk factor like the Dogecoin which can move in either direction based on what Elon Musk tweets.

It is also important to note that when you pick a cryptocurrency to trade, it would be wise to ensure that the cryptocurrency matches the strategy you pick. For example, if your preferred strategy is patient scalp trading, then investing in volatile coins that have a high upside but carry a lot of risk is not the wisest move. 

To swap crypto on Obiex Finance, add the wallet of crypto assets you’d like to swap, send the crypto to the wallet you just created, navigate to the ‘swap’ option on your dashboard, and select the coins you’d like to swap. You will receive the swapped coin in your wallet balance immediately without waiting for network confirmations.

  1.     Securely store your cryptocurrency: The same way you’d protect your goods and profits if you had a physical store is the same way you need to protect your cryptocurrency so it doesn’t fall into the wrong hands.

You can store your crypto securely on your Obiex wallet but if you want an alternative, physical wallets are also an option. Physical wallets allow you to store your crypto in secure hardware, offline storage device reducing the likelihood of online hackers stealing your hard-earned crypto. This is a list of reliable physical wallets you can use.

Conclusion

If you’re a newbie to crypto trading, the keyword is patience. Taking the time to properly understand the market before making trades will stand you in good stead. While risks occasionally pay off, a patient, long-term strategy is required to make consistent profits. For more information about trading as a newbie, you can check this out to understand unfamiliar crypto terms and to learn more about spot trading and futures.

Obiex Frequently Asked Questions | Obiex FAQs

  • Will I be charged a fee when I swap coins on Obiex? 

No you won’t. While other crypto exchanges charge for trades and require confirmations to execute swaps, Obiex allows you to make free, instantaneous swaps without the delay that comes with waiting for confirmation. This also helps you avoid unnecessary losses.

  • Can I trade crypto on Obiex if I don’t know much about crypto? 

Yes, you can! The Obiex Finance platform allows both rookie and experienced traders to make easy, safe trades regardless of trading experience.

  • Can I send and receive crypto easily?  

Yes, you can. To send crypto, you will use your private key to execute outgoing trades and your public key/your wallet address to receive incoming trades. You can also send and receive crypto using just Obiex usernames.

  • Why do I need to swap coins? 

Swapping coins allows you to either acquire a coin you think is (currently) more valuable than a coin you have a lot of. You can also use swaps to ensure that your funds are invested in a more secure coin like USDT if you feel the volatile coin you’re holding is about to go on a bear run and lose value.

  • Do I get a referral bonus when I invite friends to use Obiex? 

Yes, Obiex has a referral campaign that rewards users that invite their friends and family to trade the minimum of $10 on Obiex.

 

Comments

comments

Continue Reading

Crypto-Currency

Non-Fungible Tokens (NFTs): What Are They And How Do They Work?

Published

on

Non-Fungible Tokens (NFTs)

Comments

comments

Continue Reading

Crypto-Currency

Bitcoin Price Plunge: Is The Crypto Bubble About To Burst?

Published

on

Bitcoin price plunge

Comments

comments

Continue Reading

Trending