Surge in crypto currency breaks all records

Saigon Investment
(Saigon Investment) - Within the first few days of 2021, the Bitcoin currency soared to an unexpected and historical high by surpassing USD 40,000. This sudden surge in Bitcoin increased value of this particular currency by more than fifty million times, since it first traded nearly twelve years ago. This accounted for more than 70% of the crypto market cap, which also outperformed all bull records in world financial history to date.

Ảnh minh họa.

Ảnh minh họa.

Cause of surge

In 2017, when Bitcoin set high records, altcoins all climbed to the top, and at one point the entire crypto market cap exceeded USD 800 billion. Now, Bitcoin has broken that record, and the market also has thousands of other new coins or tokens. According to statistics from CMC, the current capitalization is only equivalent to the value in 2017 because many altcoins increased weakly or decreased gradually. This shows that the previous record was heavy in speculation which made the whole market go crazy. At that time, ICOs and ITOs issuing cryptocurrencies had exploded, but most of them were junk coins or were created with the intention of deceiving, because the price increased irrationally hundreds of times.

Bitcoin is currently being seen as a gold version in context of countries implementing monetary easing. Money is everywhere, but the global economy is still in difficulty and debts are piling up. Statistics show that global public debts now exceed USD 80,000 bn. Total debts, which include public debt, corporate debt, household debt, and personal debt, have also hit USD 280,000 bn. There is a lot of money, too much debt, but most of the above sources are in financial assets of stocks, real estate, or gold. This makes Bitcoin a safe asset, or a haven for cash flow due to a limited amount.

Besides, many billionaires and major financial institutions are optimistic about the cryptocurrency market. For example, Elon Musk regularly posts about Bitcoin and the crypto market on his personal page, and he even talked to investors specializing in this market. Mexican media billionaire Ricardo Salinas Pliego also said on his personal page that he has invested 10% of his liquid assets in cryptocurrencies. Wall Street investment legends like Stanley Druckenmiller, Paul Tudor Jones, and Bill Miller also advocate investing in digital currency. The number and value of transactions in the digital money market have increased steadily, especially when the Covid-19 pandemic has caused social isolation everywhere, so this market has soared in liquidity. Billionaire Mark Cuban believes that Bitcoin is equal to gold in value, but since the supply of Bitcoin is limited, while the demand is uncertain, the price of this currency will always fluctuate.

Some of the major investment banks such as JP Morgan Chase, Citigroup, Goldman Sachs, and Bank of America, also made positive forecasts on Bitcoin. JPMorgan Chase believes that digital money will cause damage to gold for many years to come and that it has just released JPM Coin, despite the objections of the CEO. Many crypto investment funds have also been established because of availability of more open legal corridors in many countries. Traditional funds also allocate less of their assets to this market to minimize risks from other channels.

Digital currency in Vietnam

Recently, what billionaire Elon Musk wrote on his personal page has made headlines the world over. He proposed converting big transactions on Tesla's balance sheet into digital currency. Previously, investors had assumed Elon Musk's Tesla would digitize its shares into digital stocks. Mr. Stani Kulechov, CEO of Aave, also wants Tesla to join the decentralized finance (DeFi) craze which is a form of stablecoin pegged to real stocks. This had excited investors to support Tesla's share price in 2020. Some exchanges like DX.Exchange also put many shares on the blockchain to turn real assets into digital assets, such as stocks of technology companies listed on the Nasdaq exchange, like Apple, Tesla, Facebook, and Netflix and converted them into crypto securities.

The above movement shows that the world has turned a new page along with the development of digital economy, digital finance, and digital money. Digital currency has been issued by many countries on a trial basis, such as China with the digital yuan. Europe, South Korea, Japan, and even many smaller economies such as  Thailand and Cambodia are also trying out digital currency.

Although the US does not have electronic dollars, the US Federal Reserve (Fed) has said that physical dollars can be printed, as it will help the central banks and regulators to have the required tool to manage policies to support economic development. However, compared with traditional tools, the current digital tools have faster processing speed, and can help the Central Banks and Governments to control better, especially at a national level.

Currently, trading in digital currency in Vietnam is considered illegal. Regulators warn against such activities like creating junk coins to attract investors. However, the technologies behind the crypto market, such as Blockchain, is still being researched, although it is also being applied by many businesses and financial institutions in many areas of business. For example, HSBC and Vietcombank make domestic mail credit transactions in Vietnam dong on the blockchain platform, which is done successfully within 27 minutes, much faster than the traditional method, which takes three to five working days. The Hoa Binh Construction Group has also assigned use of Blockchain technology services of Japan Technology Corporation Infinity Blockchain (IBG).

In addition, regulators are studying the legal corridors, as well as prioritizing the development of new technologies in order to best apply more benefits of these technologies to promote economic growth and optimize use in the 4.0 hi-tech era. Specifically, in December 2020, the Prime Minister of Vietnam issued a list of technologies prioritizing research, development, and application of such technologies, so as to actively participate in the 4.0 revolution.

Phan Dung Khanh

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