It started with less than 3,000 users in the year 2009.
But now the number of merchants of Bitcoins has increased from 36,000 to 182,000 and still counting. Bitcoin has become a lucrative investment with lots of users. One may ask why the inventors of Bitcoin keep growing year after year.
The Findings
Bitcoin topped the list of the “most crowded trades” in the world. This was an estimation of the point of view on which a well-known investment could quickly reverse its gains. In the bank of America Merrill lynch’s December global manager survey, 32 percent of participants mentioned Bitcoin as the most crowded trade moving from 26 percent in September when the cryptocurrency first topped the list.
29 percent of the respondents attributed the next crowded trade to the betting on stocks of the U.S and Chinese technology giants. More than ever, more conventional money managers are troubled about the Bitcoin.
The fast-growing digital currency came first in the list of “most crowded trades” at the time Bitcoin suddenly increased about 375 percent for the year to $4600. However, that was not the case, regardless of an unstable nature of the Bitcoin in September, in which the cryptocurrency shortly dropped rapidly more than $2,000.
The drop in price was as a result of China cracking down on the cryptocurrencies and J.P Morgan Chase CEO Jamie Dimon, referring to Bitcoin as fraud that “won’t end well”.
Bitcoin has abruptly quadrupled since September to shortly trade beyond $19,000 in the last week.The charging part of the rally was the launch of Bitcoin futures on the CME, the world the biggest futures exchange and its contender the Cboe futures exchange.
The BofAML Survey and the Breakdown
The BofAML survey, which was conducted from the 8th of December to 14th of December, covered 172 worldwide fund managers with an estimated total of $480 billion in assets under management. This survey is considered widely as one of the best surveys of investors administered on Wall Street.
Betting on the stocks of U.S and Chinese technology giants is another crowded traded according to the 29 percent of the respondents.
Facebook, Amazon, Apple, Netflix, Googles, parent, and ALPHABET are all up close to 37 percent to 60 percent this year against the S&P 500s 20 percent gain. 97 percent can be accredited to Alibaba the Chinese e-commerce conglomerate, and 47 percent to Baidu’s search engine.
Large fund managers cannot help themselves from pursuing the explosive gains offered by Bitcoins. Their fast-growing interest had made owning the scorching hot digital currency the markets most crowded.
The survey conducted by America Merrill lynches saw 203 fund managers overseeing $558. It is therefore not surprising that traders are rushing to get Bitcoin exposure considering it sudden rise in the recent years.
The cryptocurrency has increased roughly 1800% versus the US dollar this year growing its market cap to more than $300 billion according to report.
From its Very Beginning
It began the year when Bitcoin was worth less than $1,000 but rose above $17,000. Back in 2011, it was worth less than a dollar being bought and sold by investors in an uncontrolled excitement, shooting the price higher and higher.
Some investors and leading economist referred to Bitcoin as a bubble and fraud but the industry representatives say they think it is only going to get bigger as it gains more widespread acceptance.
Bitcoin was created by an unknown person using the pseudonym Satoshi Nakamoto. Many of its backers saw it as a simple global payment system for anyone to use rather than a financial asset for investors to trade.
The Bitcoin is not issued by central banks like the federal-reserve instead they are mined by computers using algorithms.
Payment in Bitcoin can be made without any traditional middlemen such as banks and without the need to give your name. This made Bitcoin very popular with criminals and others who wanted to move money anonymously. Its also been adopted by business around the world for transactions.
Exchanges or marketplaces allow people to buy or sell Bitcoin using different currencies. People can send Bitcoin to each other using mobile apps or their computers and a fee charged for every transaction.
This was attributed to the fast-growing rate of users and investors of the cryptocurrency, leading to a survey that to Bitcoin being the most crowded investment in the world.
photo from bitcoin.com