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25.05.2021 10:28 AM
Bitcoin bounces back after a massive plunge last weekend

Bitcoin rose a bit on Monday, offsetting some of the losses the market had last weekend. The main reason was Goldman Sachs, because it finally acknowledged Bitcoin as an asset class. Earlier, the bank said BTC has little chance to survive in the market, but now its position is in favor of the cryptocurrency.

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The announcement surprised many investors because last week, not a single member of Goldman Sachs spoke in defense of Bitcoin.

In addition, Bridgewater founder Ray Dalio, who previously said he is concerned about the future of Bitcoin, suddenly said yesterday that he would rather own the cryptocurrency than government bonds. He pointed out that if the crypto market continues to gain attention, investors will choose to invest in them rather than in government bonds, which will result in governments losing control over their ability to collect money. Undoubtedly, that is the reason why leading countries are trying to develop digital currencies. They want to prevent such a scenario.

Hence, the Federal Reserve recently stepped up its efforts to research digital currencies. Fed member Lael Brainard said there are three main reasons why the central bank started to focus on them: the growing role of digital money, plans to use digital currency for cross-border payments and the possible benefits of financial inclusion.

Surprisingly, Brainard also mentioned Stablecoins. According to her, they pose serious threats because they are not regulated by anyone.

And last week, Fed Chairman Jerome Powell said the central bank will release a research report on digital currencies this summer. They will also seek to engage a wide range of stakeholders to implement the project.

Powell also said that cryptocurrencies are not good means of payments because they are highly volatile. As such, Stablecoins are likely to receive more attention from regulators in the near future.

Going back to Dalio, he said that investing in bonds is now a terrible idea because Treasury yields no longer exceed inflation. Instead, he is now looking at Bitcoins, although in previous statements he claimed that it would make him lose about 80% of the invested money.

Jakub Novak,
Analytical expert of InstaForex
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