Bitcoin broke through the historical high of $70,000 this week. A recent analysis by The Economist suggests that Bitcoin, which has been in existence for 14 years, has never been hacked, indicating that it will not disappear. The introduction of Bitcoin spot ETF may trigger a short-term astonishing surge, but the long-term price trend may become slower and more stable.
Bitcoin surged past $70,000 on the evening of the 8th, setting a new historical high. The Economist recently published an article titled “What Will Happen After Bitcoin Soars” to analyze that Bitcoin’s rise is not isolated. Currently, all assets are rising, and stock markets around the world are approaching historical highs, as is the price of gold. Even bond prices have risen after experiencing a bleak trend for two years.
The catalyst behind the overall market rise is the AI frenzy, the optimistic outlook for the global economy, and the expectation of looser future monetary policies.
Nevertheless, The Economist points out that Bitcoin’s performance still surpasses most assets. This is mainly due to the approval of 11 Bitcoin spot ETFs by the SEC in January, making it easier for ordinary investors to purchase Bitcoin. Currently, the total assets of the top 10 Bitcoin spot ETFs have reached $50 billion.
The article believes that Bitcoin, which has been in existence for 14 years, has never been hacked due to its self-validation and supply growth mechanism, indicating that Bitcoin will not disappear. However, due to high transaction costs and slow transaction speeds, the payment utility of Bitcoin is quite limited. With the emergence of ETFs, it is obvious that Bitcoin has become an investment asset.
The future trend is expected to be stable. The Economist mentioned that there are two theories in the market regarding the trend of Bitcoin. The first theory believes that investing in Bitcoin is a broad bet on technological progress, reflecting the prospects of cryptocurrencies. The second theory believes that Bitcoin is a limited-supply digital gold, and both theories may have some validity.
The article suggests that if investors accept the inclusion of this mixed asset portfolio consisting of technology stocks, cryptocurrencies, and gold, Bitcoin may continue to rise for a period of time. However, when Bitcoin completes its transformation into standard financial assets, assuming that Bitcoin has become part of the majority of investors’ portfolios and cryptocurrencies have not become truly popular, the long-term trend of Bitcoin will be similar to that of gold.