Bitcoin has ceased to occupy the close group of its digital followers, exchanges, mining units and those who believe that cryptocurrencies are the answer to the inflation money issued by central banks.
According to a report by Russell Napier, a key strategic macroeconomic analyst, the total number of US dollars circulating around the globe in 2020 was up + 25% from the 2019 figure.
Is bitcoin the answer to this new reality?
Is bitcoin a response to the volatile and unpredictable macroeconomic environment and the significant challenges facing the international monetary and financial system?
Is bitcoin the modern Ark of Noah, which will remain unharmed by the catastrophic flood that many expect to happen in the world economy in the near and visible future?
Veteran investor Jeremy Grantham claims that bitcoin is based 100% on loyalty. A faith manned in a financial and economic environment that looks like quicksand.
But what happens when markets return to normal? When will trust be restored? What will be the need for an investment tool based on faith alone?
Deutsche Bank, through its latest analysis, insists that the rise of bitcoin is the third largest “bubble” of all time, after the Dutch tulip bubble in 1637 and the Mississippi bubble of 1720.
The increase of bitcoin’s participation in the systemic part of the markets along with the increase of the risk from this participation, force us to look at bitcoin with a different look.
No one can determine the value of bitcoin. However, its price is determined daily by the exchange offices and the alternative stock exchanges. This price now clearly integrates the exposure of large companies in bitcoin. So on the one hand, the price of bitcoin goes up as companies such as Tesla and Microstrategy buy bitcoins, but on the other hand, the shareholders of these companies now bear the risk of their participation in bitcoin.
Tesla shareholders, for example, have invested in a company that makes electric cars and develops energy storage plants. However, after the conversion of part of Tesla’s cash into bitcoin, the shareholders actually participate in the “bet” of the bitcoin.
The same will happen to a number of institutional investor portfolios that are beginning to invest part of their investments in cryptocurrencies. Therefore, willingly or not, bitcoin rises even indirectly to the scale of investment tools.
Agustin Carstens, who heads the BIS (Bank of International Settlements), the central bank, has long warned of a delay in the reaction of systemic market players. According to him, bitcoin has passed into the central financial system, while at the same time posing a new significant systemic risk to financial stability.
The independent, anti-systemic, decentralised and uncontrolled bitcoin, as advertised with religious reverence by its followers, is now becoming part of a space with a specific regulatory and regulatory framework and a centralised system of clearing and control.
And the question is, will the system succeed in integrating bitcoin and inactivating the risk of the “freedoms” contained in bitcoin or, conversely, will bitcoin succeed in causing a systemic disintegration in the financial space? This is a reality, with fragile balances and worries about the possibility of a domino effect.
