A lot of understudy has been going on over Bitcoin and the possible potentials the cryptocurrency has. Many analysts have come out to say different things about the coin, a lot was said about the coin at inception too, and some of the people who predicted doom for the coin when it was launched, have turned round to invest in it too.
GBTC – Grayscale Investments
Recently, Grayscale Investments, the crypto asset manager that gets its support from Digital Currency Group, the new owners of CoinDesk after acquiring it in 2016, has come out to say something about Bitcoin, and its ability to function as a hedge when there is a global liquidity challenge. The authors of the report are of the opinion that some consideration should be given to Bitcoin, because they believe that it could be a strategic tool for hedge investments, as it has global liquidity, it is immutable, and transparent. Furthermore, they said that Bitcoin has some unique properties that many other digital assets do not have, and the properties are responsible for the coin’s performance, which is much better than the usual economic cycles, and cause a stir in the market.
Causes of Financial Crisis / Why Bitcoin?
According to the report, in different parts of the world, there are no significant changes in trade, fiscal, and monetary policies. Furthermore, Grayscale said it may get to a point where it would be really difficult for policymakers and politicians to effectively take care of their economies, hence, making a point that there would be the need for investors to be in charge and total control of individual finances.
The report analyzed some macroeconomic shifts that happened in recent times, and the shifts were indicative of the fact that Bitcoin performed better than other investments, because it was used indirectly as a store of value. According to the extrapolations of the authors based on different happenings like Brexit, Grexit, renminbi’s structural devaluation by China, etc. the authors explained that Bitcoin had the features that could make it a valuable tool to help different types of investors have their portfolios safe from crisis as a result of market failures.
The report further explained how Bictcoin’s ability to hedge in case there was a liquidity crisis had worked in recent cases.
With Grexit looming, and banks shutting down, people sought for a better alternative, and till the matter was resolved, Bitcoin got returns of about 28%.
When there was a policy change in China as it sought to cause a structural devaluation of the RMB, the market was hit hard, and people sought to hedge their funds. Again, Bitcoin came to the rescue and people used the cryptocurrency as a hedge to put the Chinese liquidity challenges away. During the period, Bitcoin performed much better than the major currencies and markets.
When Brexit talks began, pound sterling euro, experienced a decline, and according to several researchers, the moment the decline in the market began, Bitcoin started becoming a digital asset that was performing very well, because people began to use the cryptocurrency to hedge funds.