There are many investment instruments on the financial market, among which cryptocurrency stands apart. Digital assets appeared not so long ago, but due to their features they managed to attract the attention of many large businessmen. Thecryptoinvest-agency. editorial staff decided to understand why large companies invest in bitcoin
The short answer is: to save your assets from inflation and make money.
And now for a detailed answer. To begin with, let us remind you that the bitcoin issue is limited. A total of 21 million coins will be issued. Many believe that the limited issuance “seasoned” with halving – halving the rate of BTC inflows to the market – makes bitcoin a deflationary asset.
In contrast, the issuance of fiat currencies is not limited. The launch of the “printing press” by financial regulators may devalue traditional money. At the same time, fiat owners have no influence on the situation.
For example, 80% of the dollars circulating in the market were printed between January 2020 and October 2021. The issuance of such a volume of currency in 2022 was followed by a series of key rate hikes to combat runaway inflation. To avoid exacerbating the situation, the US stopped the printing press. However, in March 2023, amid the collapse of Silicon Valley Bank, it had to be temporarily restarted to “plug” the growing crisis with money.
As of this writing, the U.S. Fed does not know when the process of raising the key rate will be completed. A rate hike makes borrowing more expensive and slows down the economy. Therefore, this approach to controlling inflation has “side effects”.
Investments in other traditional financial instruments are not so simple either. For example, the stock market is largely dependent on the decisions of American financial regulators. The hawkish policy of financial regulators puts pressure on the stock market. The “currency of fear” – gold – is not all smooth sailing either. The precious metal is significantly inferior in yield to many alternative assets.
With traditional financial instruments performing poorly or not working at all as instruments for saving savings and saving against inflation, investors are looking for alternatives. Many have seen cryptocurrency and bitcoin in particular as a solution to the problem. For example, Tesla founder Ilon Musk is fighting inflation with bitcoin, Dogecoin and Ethereum.