Image source, Reuters
8 hours ago
The US authorities have taken the step that has been expected for some time, which is to allow companies to invest the funds of their depositors and customers in Bitcoin.
Investment and trading funds can invest depositors’ funds in this area, starting from pension funds, and even the funds of major investment portfolios.
Supporters of virtual currencies around the world were circulating posts on social media regarding the American move.
What are investment and trading funds?
Mutual and exchange-traded funds are investment portfolios that allow their owners to own bonds and multiple assets, without having to register them directly in their name.
By trading these portfolios in bond and stock markets, their value depends on their performance on the stock exchanges, every moment.
The investment and trading fund can include several assets, such as: gold, silver, polycarbonate, or bonds from the shares of technology companies and insurance companies.
Some existing funds already include bitcoins directly, but the new decision will allow the funds to buy them directly and immediately at their realistic price.
Why this enthusiasm?
Dozens of investment companies had been waiting for this decision for months, such as Blarock and Fidelity, until the US Security and Trade Commission gave its decision to allow investment in Bitcoin, after weeks of disagreements over the correct wording of the decision.
This decision means that there is a new sector of investors that will enter the Bitcoin investment market, without the need for intermediary procedures that previously hindered it, such as forming inter-digital wallets to cover purchases.
It is expected that billions of dollars will be pumped into the Bitcoin market by entering this new sector.
Some analysts believe that the price of virtual currencies will not be greatly affected, because trading and investment funds already own, in one way or another, their virtual currencies.
But with the entry of large buyers in the United States into the market, many expect that the value of Bitcoin will rise with increased demand for it.
The value of Bitcoin increased to about $70,000 in 2021 before declining the following year to only $16,000.
Last year, it rose again to $44,000, for several reasons, including the expectation that the United States would allow investment in digital currency.
According to an idea published in 2008 by a person named Satoshi Nakamoto, Bitcoin is the first and most important digital currency ever.
The value of Bitcoin is an indicator of the performance and value of the rest of the digital currencies, which currently number in the thousands.
It is expected that interest in digital currencies in general will increase in the coming period.
What are the consequences of the decision?
Some believe that the recent decision shows that American institutions have begun to take digital currencies into consideration, with the required seriousness.
For those who see Bitcoin as a legal investment, they consider it to be “digital gold,” and there is no stronger evidence than the entry of major investment companies into the field to prove their point.
Others believe that digital currencies will lead to the end of the era of central financial institutions, for the benefit of individual investors, who invest with the aim of enrichment.
From the buzz on social media, there appear to be hopes that pumping money into the Bitcoin market will make investors richer.
The price of Bitcoin can change rapidly and often without warning or explanation.
Therefore, investors must evaluate when they want to link their ETF portfolios to cryptocurrencies, which are sold as high-risk investments anyway.
Sometimes, there is a possibility of being accused of cybercrime when purchasing cryptocurrencies.
Bitcoin, and other digital currencies, were subject to many problems, so that the companies that invested in them experienced difficult times, and their coffers were sometimes emptied of liquidity, which reached hundreds of thousands of dollars overnight.
If companies like BlackRock buy Bitcoin heavily, their digital security sectors will be subject to many tests in the face of digital hackers.
Another matter is the environmental impacts of digital currency mining operations, which depend on consuming large amounts of electricity to operate advanced computers around the world to obtain and exchange new currencies.
Despite the increasing use of renewable energy, it will become clear how Bitcoin investment companies will balance purchasing operations, the concern of buyers concerned about the environmental and social consequences of Bitcoin mining, and the extent to which trading and investment funds comply with the laws.
2024-01-11 15:58:45
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