Why has Bitcoin been pumped heavily lately

Corporations are fueling the Bitcoin course - this is attracting more and more small investors

Vienna - The big names that dive into the world of digital currencies and asset classes add up, or at least have announced it. As a result, the courses make big leaps. For example, the crypto flagship Bitcoin broke the $ 50,000 mark at the beginning of the week, and by the end of the week the price was another $ 6,000 higher. This was preceded by Elon Musk announcing that he had invested $ 1.5 billion in Bitcoin and that Tesla would accept the digital currency as a means of payment in the future. In addition, companies such as Mastercard and Paypal opened up for Bitcoin.

This is fueling the market and making it attractive to an ever broader field of investors. From the newcomer to the professional investor, everything is included. It's about a market that already has a lot of money in it, but there is still a lot of room for improvement. If you add up all of the crypto assets traded, the result is a market capitalization of around $ 1.5 trillion. For comparison: with Apple, Amazon and Microsoft there are individual companies that are worth more.

Invest in crypto

The hype makes a crypto investment interesting for many people. However, it is extremely time-consuming to keep track of the large number of coins and their different developments. The Viennese start-up Coinpanion wants to remedy this problem. The four young entrepreneurs have developed a platform with which one can automatically invest in crypto assets.

What does that mean? It is comparable to a classic equity fund. The user transfers money or existing crypto assets to Coinpanion, where the money is invested in a portfolio. "The customer can decide for himself how much risk he wants to take," says Managing Director Alexander Valtingojer about the STANDARD. Currently, customers cannot yet influence the weighting of the assets, as this would change the risk calculation. But that is planned for the future.

"The portfolio is broadly based, so we minimize the risk of default in the event of a crash and cushion volatility," says Valtingojer. The actual trading is done by an algorithm. This acts on the basis of market analyzes. If the market goes down, it exits; if the market recovers, it re-enters.

Only coins of a certain size

Investments are only made in coins that already contain a certain amount of money and that are not tied to a platform. Elon Musk recently attracted attention not only with his Bitcoin investment, but also with the Japanese fun token Dogecoin. In short, he drove the price up with one tweet and crashed it again with the next.

You don't have Dogecoin in your portfolio, explains Valtingojer. He sees the topic as ambivalent: "It is questionable when assets are pumped up without substance just because someone has the media attention. On the other hand, it gives many people the courage to trust this market when so many big players enter "(about Musk's Bitcoin investment, note.).

Valtingojer emphasizes the importance of strategy when investing. "If you buy a single stock and hope it will go up, you're not investing. It's like gambling." He doesn't want to give the exact number of users yet, but he speaks of a brisk influx. According to its own information, Coinpanion currently manages more than one million euros from customers. The service is still free for users, but the trading fees of the trading exchanges apply.

Pressure on central banks

This development increases the pressure on central banks and the traditional monetary system. During the crisis, the central banks made their monetary policy, which was already loose, much more generous. The states support consumers and companies with high expenditures, which increases the national debt burden sharply. This development could result in increased inflation that would devalue traditional currencies. Fear of increasing inflation, many are investing in crypto assets. For example, you see the new gold in Bitcoin.

One thing is certain: We are currently in a massive bull market. A year ago, Bitcoin was still around $ 5,000. But you also have to be aware that course corrections of 20 to 30 percent can occur at any time. (Andreas, Danzer, February 20, 2021)