Some people say that sunlight can achieve the best disinfection effect, but the Bank of China (PBOC) has just cast a shadow over Bitcoin. According to many media reports, the central bank of China will inspect the Bitcoin exchange, which led to a 14% drop in the price of the currency that day, down 22% compared with the beginning of this month.

interestingly, although the volatility of Bitcoin was relatively small in 216, such a sharp decline is not uncommon in history. In addition, the strengthening of supervision is a good thing in my opinion, because I have always regarded Bitcoin as an important digital asset in the field of financial technology investment.

China exchanges are so important because they cover most of the transactions in the world. At present, the daily average transaction of bitcoin has surpassed that of gold ETF, and 95% of them are in China. China is very important to the development of Bitcoin, so the policy of the Bank of China cannot be ignored.

bitcoin has always been regarded as a tool to cause capital outflow. Assuming that the Bank of China's move is to confirm this speculation, I think they are unlikely to find strong evidence.

but first of all, we should make it clear-the total value of existing bitcoin is about $13 billion, however, the amount of capital outflow from China last year was as high as $32 billion-so even if bitcoin is really the culprit of capital outflow, the amount is too small to be humane.

The crux of the matter is that even if the Bank of China finds the connection between Bitcoin and capital outflow, because the amount is too small, they are only reshaping the exchange structure at most. In addition, because institutional investors are becoming more and more interested in Bitcoin, this round of price decline can shift Bitcoin from unstable investors to more far-sighted investors.

it is difficult to predict the future. However, since the new year has arrived and the currency price is still unstable, it is time to think about the future of digital currency.

in the long run, the financial revolution led by bitcoin will create a more perfect, efficient and strong financial system. However, in the new year, I think three things may happen in the field of bitcoin.

Bitcoin has become a currency

Bitcoin has become a new asset category that investors can choose

Bitcoin has become a value-preserving asset in the global currency crisis

Bitcoin is an alternative currency, similar to gold, but it is more available because of its digital nature. Gold has always served as a monetary function, but what if you use an ounce of gold to book a room in a hotel? It is simply an impossible task. But bitcoin can do it. In fact, I have already booked a hotel with Bitcoin on Expdeia (an online travel company), and I find this method more convenient and safer than using a credit card directly. It only takes a few clicks of the mouse to transfer out Bitcoin, and there is no need to submit any personal information during the whole process, so there is no need to worry about being hacked. My credit card is still safely in my wallet.

As early as 29, when Bitcoin was born, it set off a financial technology revolution. The blockchain, the underlying technology of Bitcoin, has become a hot star in the world of financial technology. Interestingly, the use case of blockchain technology is not limited to the financial field, but it can also be used in industries such as inventory tracking, medical care and identity authentication. In the medical field, it can track sensitive patient information; Wal-Mart uses it to track the pork supply chain; It can also solve the problem of identity theft and ensure the safety of personal information.

but in essence, bitcoin is still a currency. The original purpose of the birth of Bitcoin is to realize the monetary function. At present, Bitcoin is also the perfect use case of blockchain.

in fact, the most important factor for the rise of currency price is the depreciation of RMB. In the past two years, the relationship between RMB and currency price is obvious. The increase in transaction volume has made China the center of bitcoin transactions. As a hedge, Bitcoin is becoming more and more popular, and the average daily trading volume in China even exceeds that of gold ETFs in the United States. This phenomenon has also attracted more and more institutional investors.

In my opinion, like the development of foreign exchange and futures in the past decades, digital currency and Assets will create new asset classes for investors. If the currency crisis cannot be effectively stopped, institutional investors are likely to hold similar views.

To some extent, the presidential election in the United States is to attract more funds to return to China, thus promoting the economic development of the country. This idea is commendable, but there is a major risk. The United States has capital inflows, which means that developing markets such as China are facing capital outflows. In the past decades, capital inflow has become an accelerant for China's GDP, resulting in an increase of more than 1%. With the development of economy, enterprises, investors and China people have accumulated a lot of debts, but this situation is likely to reverse.

the weakening of capital liquidity has brought about economic instability, which is likely to cause a continuous currency crisis, especially in Asia. This situation is likely to attract more institutional investors to choose Bitcoin. In addition, people who are deeply harmed by legal tender will also turn to Bitcoin. Although the currency price has fluctuated greatly recently, in the past two years, Bitcoin has outperformed gold, and its volatility is gradually weakening.

Bitcoin, a more practical currency than gold, can ensure the safety of assets in the global currency crisis, so it is not surprising that Bitcoin is so popular. However, this does not mean that Bitcoin does not have the characteristics of traditional financial market products. Although I think Bitcoin is a revolution, I know that this kind of digital currency will also be affected by market sentiment-fear, greed, excitement and disappointment are all catalysts for people to buy or sell coins-and the recent crazy rise in the price of coins is caused by market fanaticism.

With the increasing number of investors, traders and end users in the bitcoin ecosystem, its volatility will become smaller and smaller, and bitcoin will become more and more like its legal tender "relatives" ... but there is a major difference between them; As the number of companies exploring bitcoin and blockchain use cases increases, their demand for such assets will also increase, while the supply of bitcoin will shrink seriously. The total number of bitcoins is 21 million, and 16 million have been dug up so far. The remaining 5 million will be dug up in the next 1 years ... Yes, it will take a century.

you don't need to get a doctorate to understand the principle of supply and demand. Therefore, it is not too late to start bitcoin. But like other assets, it is best to buy at a low price and sell at a high price.

The currency price hit a record high on January 4th this year, but it plummeted by 33% after the news that the central bank investigated the exchange broke out in China. This round of plunge has masked many positive signals: supervision, censorship or exchange structure cleaning will help attract institutional investors. I think those who are busy with selling have made a big mistake, which is why I still buy bitcoin.