Even though Bitcoin was created initially to be a peer-to-peer payments system, its use has skyrocketed over the years. With the coronavirus pandemic that happened last year, so many individuals and entities were pushed to Bitcoin. While some of them were holding the asset to gain profits when it makes a surge, some of them held it as a hedge against the dwindling economy at that period.
Even though Bitcoin didn’t do much around that period, those that held the asset from that period towards the end of the year were the biggest gainers as it saw highs upon highs to close out the year. At a recent interview, the CEO of FalconX, Raghu Yarlaggada, spoke about the influx of institutional investors into the Bitcoin network and their effects on the price of the asset.
Yarlaggada points out to inflationary hedge as the major reason
At the interview, the California-based entity CEO has detailed insight into people’s major reasons and is still rushing into the network. According to Yarlaggada, the first reason why Bitcoin saw so much patronage was because the major players were looking for assets that would act as a hedge against inflation, and Bitcoin was the best bet. He noted that with central banks across the country printing more notes into their respective economies, it was vital for them to make such moves to counter their already inflated economies.
Talking about the second reason, the FalconX CEO mentioned that even though most people weren’t aware of this, but most of their investors told them that they were into Bitcoin because the digital asset could act as a hedge against geopolitical risks. “A typical example is the trade war between the United States of America and China. With a new administration already on board, some investors are of the thinking that the trade war night is ignited”, he said.
Other crypto enthusiasts agree on crypto surge during the US-China trade war period
Yarlaggada said that they had to act fast and pool funds into the asset for them not to be caught in the crosshairs when such happens. Also, Bitcoin has always had an excellent response to the US-China trade wars during the war that the war has been ignited. In a previous interview with major crypto entities present, including the CEO of Ethereum, Vitalik Buterin, they agreed that when there is a bad relationship between the United States and China, crypto has always gained more.
They mentioned that even though neutral people will suffer from it, those with some or all their funds in Bitcoin would not suffer too much. According to Yarlaggada, the last reason is that investors like to push finds into assets that they can access any time of the day.
Since investors can sell off their Bitcoin and buy at any point in time, most of them have chosen the asset as the best bet to invest in. Giving a key example, Yarlaggada mentioned Tesla as a perfect example of how the firm chose to hedge against the dollar by investing in Bitcoin.