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Revix Roundup

Revix Roundup | Will bitcoin breach $50,000?

The overwhelming majority of investors are interested in digital assets, according to a survey from asset-management giant Fidelity. The survey, covering nearly 800 investors in the U.S. and Europe, found that nearly 80% of institutional investors found something appealing about the nascent asset-class. It also found that more than a third of these investors have already directly or indirectly invested in the market.

Fidelity conducted the survey from November 2019 to early March 2020, ending just before the COVID-19 economic and health crisis gripped global markets. Tom Jessop, president of Fidelity Digital Assets, said the survey also predated the release of an investor letter by famed hedge funder Paul Tudor Jones, which outlined a thesis for investing in bitcoin as an inflationary hedge.

“[It] confirmed what a lot of investors were thinking,” Jessop said.

Unconventional monetary policy by central banks aimed at stimulating the economy has forced investors to find new ways to preserve their wealth. This has pushed them into digital assets according to Fidelity’s Digital Assets Director of Research, Ria Bhutoria. Bhutoria has said investors found digital assets’ uncorrelated nature and high potential upside as particularly appealing.

Compared to 2019, the portion of U.S. investors who hold digital assets increased from 22% in 2019 to 27% this year. Still, there are a number of obstacles institutions face in investing in the market, including price volatility, the lack of fundamentals to gauge appropriate value and market manipulation.

Overall, this is a trend heading in the right direction for the crypto market and you can’t help but be excited about what the future holds.

Invest now

Unfazed by Bitcoin’s latest stagnant price movements, some high-profile investors like Chris Burniske still see bitcoin breaching $50,000 during its next bull run, anticipating that it will account for a significant portion of gold’s market share.

A Chainalysis report found that 85% of the bitcoin currently held on exchanges is in the hands of professional traders who rarely make transfers. In fact, 96% of all transactions are made by retail investors who control a much smaller slice of the overall pie. The last time the level of long-term “HODLing” rose this high was just prior to its meteoric 2017 rise.

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Bitcoin has long been described by proponents as digital gold, but its trajectory has also shared some similarities with another cornerstone asset: crude oil. Nobody quite knew what to do with oil in the late 1800s as a cumbersome commodity with limited real-world uses, good for kerosene lamps and not much else. Sound familiar?

Bitcoin’s original proposed use case as a possible fiat alternative appears to have been a failure, but its shortcomings have spurred innovations in other areas that offer hope for an unknown killer app on the horizon, just like cars and planes eventually sparked consistent demand for oil.

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Italian banks are ready to trial a digital euro

The Italian Banking Association (ABI) announced on Thursday that its banks are willing to pilot a digital euro. ABI, made up of over 700 Italian banking institutions, expressed its desire to help speed up the implementation of a digital currency backed by the European Central Bank(ECB) by participating in related projects and experiments. Last year, ABI set up a working group to research digital and crypto assets.

Italy is not the first nation to express an interest in experimenting with a digital euro. Earlier this year, France’s central bank sent out a call for proposals for Central Bank Digital Currency CBDC experiments. The Dutch Central Bank also announced the Netherlands was willing to trial a digital euro.

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In the beginning, there was Bitcoin, which was designed to function as a decentralised digital alternative to cash. Over time, a number of more specialised currencies have appeared — like Ripple’s XRP and Monero. These new currencies didn’t just appear from nowhere, many came about as a result of a fork.

Forks occur when the user base or developers decide that something fundamental about a cryptocurrency needs to change. This can be due to a major hack, as was the case with Ethereum, or as a fundamental disagreement within the community, like we’ve seen with Bitcoin and Bitcoin Cash.

In its broadest sense, forks are essentially a split in the blockchain network. The network is an open-source software, and the code is freely available. This means that anyone can propose improvements and change the code. The option to experiment on open source software is a fundamental part of cryptocurrencies, and also facilitates software updates to the blockchain.

Forks occur when the software of different miners become misaligned. It’s up to miners to decide which blockchain to continue using. If there isn’t a unanimous decision, then this can result in the creation of two versions of the blockchain. When this happens, there can be periods of increased price volatility.

Hard forks v Soft forks

The creation of bitcoin cash from bitcoin is an example of a hard fork. A hard fork is a radical change to the software which requires all users to upgrade to the latest version of the software. Nodes — a fancy name for the computers — running on the previous version of the software will no longer be accepted on the new version. A hard fork is a permanent change from the previous version of the blockchain. If there isn’t unanimous consent for the new version, this can result in two blockchains using a variant of the same software.

A soft fork is backwards-compatible. This just means that the upgraded blockchain will not recognise the nodes which haven’t been updated. In order for a soft fork to work the majority of miners need to upgrade. The more miners who accept the new rules, the more secure the network will be after the fork. Soft forks have been used on both bitcoin and ethereum blockchains, among others and they’re generally used to implement software upgrades.

About Revix

At Revix, we’re driven to empower everyday people to become their own wealth managers. Cryptocurrencies have been our first investable category. We offer Bitcoin, a regulated gold tokenised-commodity called Paxos Gold, and 3 ready-made crypto Bundles. These Bundles are like the S&P500 for crypto, and offer passive diversified exposure to the crypto asset class. Investing is as easy as signing up, choosing an asset, and then watching your portfolio grow.

We have some exciting new products on their way. Soon you’ll be able to invest in emerging themes, sectors and asset classes in an effortless way. Sign-up to learn more.

Disclaimer

This article is intended for informational purposes only. The views expressed are not and should not be construed as investment advice or recommendations. This article is not an offer, nor the solicitation of an offer, to buy or sell any of the assets or securities mentioned herein. You should not invest more than you can afford to lose and before investing, please take into consideration your level of experience, investment objectives, and seek independent financial advice if necessary.

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