The Tribune

By CHRIS ILLING

CCO @ ActivTrades Corp

The international stock markets have experienced an up-and-down week. In the US, the rise in producer prices was spoiling investors’ buying mood at the end of last week and the Dow Jones Industrial Average (DJIA) was falling. The German benchmark index, DAX, reached a new record high on Friday and left trading with slight gains.

US economic data has been mixed, but investors were mainly looking at rather weak retail sales. Producer prices in the US rose more than expected at the beginning of the year. This could again be bad news for market participants who are betting on falling interest rates. All investors are observing new data releases very diligently and will react accordingly.

But then there are our crypto-fanatics and they seem to live only in the moment. The scandal surrounding the crypto exchange, FTX, just over a year ago seems to have been forgotten. The price of Bitcoin is rising and rising. On Wednesday last week, the crypto currency surpassed the $52,000 mark.

Since the beginning of the year, Bitcoin has gained around 20 percent. Other crypto currencies also rose. The oldest and best-known digital asset has been benefiting from increasing investor interest for days. According to experts, the introduction of special Bitcoin funds, which were approved by the US Securities and Exchange Commission (SEC) in January, is becoming increasingly noticeable. These ETFs allow investors to invest in Bitcoin without having to directly purchase the digital currency itself.

According to calculations by the news agency Bloomberg, the new funds have received about $2.8bn net within the past 30 days. The next so-called “halving” is on the agenda in April, and is another event which makes investors look positively on Bitcoin.

The ‘halving’ reduces the reward that Bitcoin miners receive for verifying crypto transactions. Ultimately, the process leads to a slower growing supply of Bitcoin, which has mostly led to rising prices so far. The market value of all Bitcoins currently corresponds to around 8 percent of the value of all gold holdings worldwide. And investors are looking for alternative stores of value.

But whether Bitcoins, variants of them or other crypto currencies will prevail as an alternative to conventional monetary systems in the medium-term, no one can reliably predict today.

Bitcoins are not recommended as an investment due to the risks involved. The very strong price fluctuations, up to a possible total loss, and the lack of protection systems are potential risks. But these strong fluctuations are attractive to the investor who understands the risks but also looks for high returns. The savvy investor will act very carefully around Bitcoin.