Is Bitcoin about to 'take off'? Don't rush, let's first see if this is reliable.
Recently, Bitcoin has become the focus of everyone's attention. Why? Because Sygnum Bank said that the circulation of Bitcoin has decreased, and Bitcoins in the market are becoming increasingly 'scarce', which may lead to a price increase. What is going on here? Let's discuss.
Why has Bitcoin become 'scarce'?
1. Institutional investors are 'stockpiling'.
Now, many large institutions (such as those managing funds) are starting to buy Bitcoin in large quantities, and they are not selling it but keeping it as reserves. Over the past 18 months, the circulation of Bitcoin has decreased by 30%, largely due to these institutions 'stockpiling'.
2. Bitcoin has become a 'reserve asset'.
Some countries and regions are also starting to treat Bitcoin as a reserve asset. For example, New Hampshire in the US has allowed the holding of Bitcoin reserves, and Texas is also moving in that direction. It's like countries are also starting to 'stockpile', further reducing the amount of Bitcoin in the market.
3. The more Bitcoin is mined, the less there is.
The total supply of Bitcoin is fixed, and the amount of Bitcoin being mined is decreasing, making it naturally more 'scarce' in the market.
Why is Bitcoin increasing in price?
1. 'Scarcity increases value'.
Currently, there is less Bitcoin available in the market, but the number of people wanting to buy it is increasing. It's like suddenly there are 1 million fewer Bitcoins in the market, but the number of buyers remains the same, so the price is bound to rise.
2. Bitcoin has become a 'safe-haven asset'.
The US Treasury market is currently unstable, and the dollar is weakening. Many people are starting to view Bitcoin as a safe-haven asset. Just like in the past when people bought gold for safety, they are now starting to buy Bitcoin.
3. Confidence has increased among everyone.
An increasing number of large institutions entering the Bitcoin market is making everyone feel that Bitcoin is reliable, willing to invest money in it, which also drives up the price.
What should investors do?
