In the past few weeks, the price of Bitcoin (BTC) has surged sharply. After hitting a high of $41,940, Bitcoin (BTC) has undergone a slight correction. At the time of writing this article, Bitcoin was trading at $39,610, reflecting a gain of 2.8% in the last 24 hours.
Being an asset unlinked to any government authority, Bitcoin is becoming a popular hedge against global uncertainty, as per venture capitalist and billionaire Chamath Palihapitiya.
Palihapitiya opined that Bitcoin will probably hit $200,000 in five to 10 years. In an interview with CNBC, Palihapitiya said: “The reason is because, everytime you see all of this stuff happening, it just reminds you that wow our leaders are not as trustworthy and reliable as they used to be.”
He further said:
“So just in case, we really do need to have some kind of, you know, insurance we can keep under our pillow that gives us some access to an uncorrelated hedge.”
As the pandemic grappled the world last year, governments across the globe have taken multiple initiatives to fight its economic effect. Specifically, the US printed trillions of dollars to spend on stimulus program.
Bitcoin, which is not confined by boundaries and managed by crypto enthusiasts and professionals without involvement of government, permits holders to have complete control without a need of any centralized authority. Furthermore, last October, Fidelity published a report indicating lack of correlation between Bitcoin and other markets, including gold and stocks.
Regarding Bitcoin, Palihapitiya said:
“It’s going to eventually transition to something much more important, but for right now, you’re just getting all these data points that prove this thing. The fabric of society is frayed, and until we figure out how to make it better, it’s time to just have a little schmuck insurance on the side, and everybody’s running in. It’s just an incredible thing. I could never have imagined it.”
Since the start of 2020, cryptocurrency has recorded considerable rise in adoption, with big players entering the sector. Nevertheless, a section of influential people in financial arena, for example Shark Tank’s Kevin O’Leary, are still not convinced about Bitcoin, pointing to regulatory issues.
The US Commodity Futures Trading Commission had earlier regarded Bitcoin as a commodity, even though latest actions demonstrate a rise in regulatory monitoring of the crypto domain. It is evidenced by a recent government suggestion restricting cryptocurrency wallets facilitating self-custody.