Bitcoin Will Make Lots of Millionaires Before “Returning Down to Earth”: Economics Professor
Despite its price volatility, Bitcoin is likely to make more millionaires.
Panos Mourdoukoutas, chair of the department of economics at LIU Post in New York City, whose works are published by Forbes and The New York Times, thinks Bitcoin is likely to turn more individuals into millionaires before its price dives again.
Bitcoin recently reached an all-time high of $3,000 this June after a huge correction to $2,682 from $2,957 in the period of two days. This is after tech billionaire Mark Cuban reportedly called Bitcoin's recent price surge a bubble.
However, this is not the case since the cryptocurrency is showing an uptrend, based on its recent price of $2,831 and its continuing upward trend.
Mourdoukoutas shared a partially similar viewpoint to Cuban's. Both had similar claims that Bitcoin's price would drop after a substantial surge, however, he stopped short of calling Bitcoin a bubble.
Making more millionaires before it crashes again
Mourdoukoutas mentioned that the digital currency made many "overnight millionaires" – individuals who invested into BTC when it was worth just a portion of its current rate.
He also mentioned that Bitcoin will reach new highs, making more millionaires in the course of the action, before "returning down to earth."
Mourdoukoutas added that one of the reasons for the increased investment in the cryptocurrency is the "ultra-low” rate of interest environment, makings the trade of Bitcoin an enticing proposition.
In addition, there is a growing mistrust in the currencies of several nations, following government policies that have pushed more investors into the cryptocurrency.
Price restricted by policies and supply
Mourdoukoutas said that one of these policies is the act by federal governments to provide new treasury bonds at record low rates to cover the old financial obligations with brand-new ones.
For instance, Japan sells treasuries that yield nearly absolutely nothing for the state, however, the nation's debts amount to approximately 250 percent of the country’s GDP. The teacher mentioned that China's treasury yields "something," however, no one knows the specific quantity of the "informal financial obligation".
The fact that there is a substantial quantity of financial obligations linked to the Chinese Yuan and the Japanese Yen diminishes the confidence of investors. Given that there is Bitcoin, a cryptocurrency that has increased its worth by 125 percent in 2016, investors in Asia have taken advantage of the possibility to invest more into the digital currency.
The economics professor also highlighted another government policy which might decrease trust in a country's nationwide currency. This relocation is when governments wish to eliminate the old currency notes, as held true in India and Venezuela. Such incidents, according to Mourdoukoutas, is one of the reasons why Bitcoin price has risen.
Still better hedge fund than traditional ones
Mourdoukoutas further commented that there are particular advantages which make Bitcoin a much better hedge than traditional ones, such as gold. He added that the millennial generation is one of the greatest supporters of the cryptocurrency as they understand BTC much better than the "baby-boomer generation.”
"Unlike gold, for instance, Bitcoin is a hassle-free medium of payment around the globe.”
The economics professor expounded that Bitcoin's supply is anticipated to be restricted to 21 mln. Compared to gold, there is no deficiency of the mineral considering that when the rate of gold rises, it supplies more incentive for gold miners to mine for gold.
Finally, Mourdoukoutas specified that the financier buzz around Bitcoin continuously helps the cryptocurrency to go upwards, as a growing number of financiers are becoming familiar with the digital currency, and can utilize ETFs (exchange-traded funds) to "conveniently participate in the market."
Author: Charles Dearing