Mar 16, · Bitcoin has again begun moving lower, following broader financial markets down as investors count the cost of the spreading coronavirus. The bitcoin price, which had found a temporary floor of just Author: Billy Bambrough. Dec 20, · Read more: A hedge fund chief who oversees $2 billion breaks down why we're in for a 61% stock-market crash over the next months - and shares 3 Author: Emily Graffeo. Nov 21, · Why is Bitcoin Going Down / Up Summary. Bitcoin’s price is defined by the last trade conducted on a specific exchange. Price goes up when buying pressure increases, and goes down when selling pressure increases. There are several major factors that can cause the price to go up or down such as: Media hype / FUD; Loss of trust in fiat currencies.
Why bitcoin market is going downBitcoin May Be Down, but These Cryptocurrency Miner Stocks Are Soaring Today | The Motley Fool
Bitcoin bull Mike Novogratz explained how the coronavirus pandemic accelerated the "cryptocurrency revolution" during a Real Vision interview published Friday.
The first was the policy response to the global pandemic, specifically from the US government, Novogratz said. The second trend that propelled cryptocurrencies? The expansion of digital life that may lead to more investors to feel comfortable using a digital wallet. Other investors have also attributed crypto's boom to the macroeconomic backdrop that has developed over the course of the year. Earlier this month, former crypto skeptic and Bernstein Research's co-head of portfolio strategy Inigo Fraser-Jenkins told clients that the pandemic has changed the policy environment, debt levels, and diversification options for investors and made bitcoin an attractive asset.
The increased fiscal expansion and higher likelihood of inflation has sent investors who are looking for an inflation hedge and store of value to bitcoin. Bitcoin tycoon Mike Novogratz breaks down how the pandemic accelerated the cryptocurrency revolution. Emily Graffeo. These compete against each other to process transactions the fastest, and new bitcoin is awarded to the winner.
This is the cryptocurrency mining process. Mining bitcoin has a real cost to it. Miners pay for their spaces, equipment, and electricity. While each company's cost structure is unique, they've all struggled to make a profit in recent years. Over time, the cost to mine bitcoin goes up; if the price of bitcoin doesn't go up fast enough, it's not profitable.
Consider recent financial data from Bit Digital. It reported results for the third quarter of on Dec. In other words, its business basically broke even. The price has since more than doubled, increasing Bit Digital's opportunity to profit.
Marathon, Riot Blockchain, and Bit Digital all generate revenue by mining bitcoin. Because the price of bitcoin has more than doubled since September, these companies should start bringing in more revenue and have a shot at higher prices.
That's why these stocks go up with bitcoin. Investing legend Warren Buffett once said, "A horse that can count to ten is a remarkable horse -- not a remarkable mathematician. I personally think this applies to cryptocurrency miners. Don't get me wrong, I like some cryptocurrencies, and I even bought bitcoin and Ether. I see it as a simple case of supply and demand. Specifically, the supply of bitcoin is limited -- and recently we've seen a surge in demand from corporate entities.
This increasing demand coupled with limited supply could keep pushing bitcoin prices higher. So I do believe cryptocurrency prices can continue to rise. I'm just not sure that bitcoin miners are the best way to invest in this trend. Even if profits for Marathon, Riot Blockchain, and Bit Digital soar in , it's only a matter of time before cash flow would need to be invested in upgrading their equipment. I'm not sure that leaves much room for creating shareholder value long-term.
There are plenty of other cryptocurrency stocks that could hold more potential. But it has powerful hardware that can be used in bitcoin-mining operations as well. In other words, the company could benefit from bitcoin miners buying new equipment, but its business isn't dependent upon that happening.
And I think Buffett would agree that that's a better horse to bet on. Investing Best Accounts. Stock Market Basics. Stock Market. Industries to Invest In.