Country Manager AAX Russia and the CIS Anton Gulin in the author's column at topplabs.org about why bitcoin can become a part of the new financial system, and how to make money safely on it
In March 2021, Elon Musk announced the start of selling Tesla cars for bitcoins. The company will not immediately sell the received cryptocurrency, but will accumulate it. Until a few years ago, this was impossible to imagine, since digital money was associated with the darknet and illegal activities, for example, money laundering or terrorist financing.
In terms of capitalization, the first cryptocurrency surpassed the ruble and now ranks 14th among world currencies, according to Fiatmarketcap . The total value of all bitcoins issued so far exceeds $ 1 trillion, and the value of the coin at its peak reached $ 61.8 thousand.
Now it is increasingly said that bitcoin is becoming the new standard of the financial system. The US dollar became an international means of settlement and storage of reserves back in 1944, as a result of the creation of the Bretton Woods monetary system. American currency could be exchanged for gold at the rate of $ 35 per troy ounce. The devaluation of the dollar did its job, so in 1976 the currency was completely stopped being exchanged for the precious metal.
As a result, the current Jamaican monetary system was created. However, financial crises such as the mortgage bubble of 2007-2008 show that this system is not ideal either. Therefore, in the near future, it may be replaced again. Perhaps the new system will be associated with bitcoins and cryptocurrencies as such, analysts at AAX suggest.
One of the main factors causing dissatisfaction with the US dollar is its high inflation as a result of economic stimulus. The Federal Reserve has “printed” trillions of dollars over the past year. This forced investors to pay attention to bitcoin, the emission of which is strictly mathematically limited to 21 million coins.
MicroStrategy bought bitcoins for more than $ 2 billion, Tesla – for $ 1.5 billion, Square – for $ 220 million. They explain their choice by diversifying the portfolio and reducing risks from a possible depreciation of the US dollar. Even the Bank for International Settlements (BIS), which has traditionally been negative about the first cryptocurrency, admitted that it could be an investment vehicle.
The easiest way to start investing in cryptocurrency is to use the Dollar Cost Averaging (DCA) strategy or dollar value averaging, AAX experts advise. This means that the purchase of an asset does not take place at a time for a large amount, but in parts. At the same time, it does not matter at all what is happening with Bitcoin: whether it renews historical highs or goes to the bottom again. If you buy for a long period, the average entry price will fluctuate evenly.
DCA's primary goal is to mitigate risk. Probably, this method will be less profitable, but no one can know exactly how the market will develop in the near future. Buying cryptocurrency in small portions at different times helps to protect against possible fluctuations.
At the same time, you can store cryptocurrency, receiving an interest rate, like from deposits in a bank. If you do not trade digital money, there is an option to keep it in a savings account with an interest rate of up to 6% per annum, with accumulation per minute. The rate is charged once a day without any locks. That is, funds can be withdrawn at any time without loss of interest. Such a product is offered by the AAX exchange. For example, for storing your own tokens of the AAB site, you can get a yield of 5.85% per annum. Owners of Bitcoin, Ethereum and XRP get the opportunity to earn 1.70%, 1.75% and 2.81% per annum, respectively.
The cryptocurrency market continues to develop actively, in the last year it has become a full-fledged participant in the financial system. Therefore, it is likely that in the future, bitcoin quotes may continue to grow, since now the industry is only at the beginning of its journey. The main advantage of a digital coin is its limited emission. Due to this, it is more investment attractive than, for example, US dollars, add. the emission of which occurs almost uncontrollably.