Simultaneously with the dollar, bitcoin has also risen in price. Over the past day, its rate has grown by 1.7% and reached $ 9275. Compared with the beginning of January, the price of BTC increased by 27%. This year’s maximum was set at the end of February at around $ 10,500.
The reason for the growth of the Bitcoin exchange rate could be the positive opening of trading on the stock market. During the current crisis, the first cryptocurrency showed a high dependence on the S&P 500 index, in many cases, the quotes of these assets grew and fell at the same time. The tools confirmed this correlation yesterday. Over the past 24 hours, the index has grown by 1.5% and now stands at 3179 points.
Positive on the market appeared even before the opening of US exchanges. Yesterday morning, China’s stock indexes showed impressive growth. For example, the Shanghai Composite Index rose 5.71%, updating the highs of April 2019. This growth has become one of the strongest in one day since 2015. Such dynamics could inspire investors from the Middle Kingdom with confidence in economic recovery and provoke an increase in risk appetite.
There were probably several drivers for the growth of the USD exchange rate. Currency quotes could be affected by expectations of the imposition of sanctions by the UK against Russia. Later Foreign Ministry published a list of 25 Russian citizens for whom sanctions are imposed in accordance with the Magnitsky amendment. These people are considered to be involved in the death of lawyer and auditor Sergei Magnitsky, who died in 2009 in the Sailor’s Silence Detention Center.
Another reason for the growth of USD quotes against the ruble could be a correction, said Andrei Berezin, managing partner of the investment company Raison Asset Management. Over the past couple of months, the Russian currency has significantly strengthened against the dollar, and now players are taking profits.
“The ruble against the dollar weakened as part of normal daily volatility – after a strong strengthening of the Russian currency, a correction has come. It can be caused by the fact that players on the ruble strengthening take profits, and the Central Bank buys currency, ”Berezin suggested.
He noted that a decrease in the key rate also played a role in the weakening of the ruble. It has become less profitable for foreign investors to take loans from European banks and invest in Russian bonds. The spread narrowed and traders began to close positions.
What to invest in: BTC or USD?
The first cryptocurrency has more potential for growth in price than the dollar. This position is shared by many representatives of the crypto industry. For example, Anthony Trenchev, co-founder of Nexo startup, is confident that the coin will rise in price to $ 50,000 within six months. Reasons: increased demand among investors for a new type of asset and uncontrolled emission of national currencies.
At the same time, bitcoin, like other cryptocurrencies, refers to risky assets. At any moment, its course may collapse at times. Such a decline occurred in mid-March, then the BTC fell by 50% in a couple of days. This is one of the reasons why it is risky to invest all the savings in a coin, emphasized Artem Deev, head of the analytical department of AMarkets. At the same time, he noted that the BTC price has good potential for growth.
“Cryptocurrencies were not as resistant to the crisis as fiat currencies, but very quickly compensated for the March drawdown, when the cost of bitcoin collapsed from $ 10,000 to $ 3,800 … Bitcoin now has good growth potential, but you should understand that the cryptocurrency market is risky, you do not need to invest he has all the savings in the hope of easy money, ”said Deev.
Berezin also did not recommend investing all funds in Bitcoin. A first cryptocurrency is a speculative tool. Investing in it should be no more than 10% of your savings, investing more is dangerous.
When investing in bitcoin, it is important to consider several factors that indicate a possible decline in price. Firstly, risks for crypto investors are borne by the correlation of coin quotes and the S&P 500, analyst Yasha Gola warned about this. In July, companies publish statements for the second quarter. The indicators are likely to be poor, as they will include three crisis months. This may affect the price of shares, therefore, the value of the S&P 500 index. If it falls, it is likely that the BTC will show similar dynamics.
Secondly, the 10-day realized bitcoin price volatility curve fell to a minimum of 20%. The last time this happened in November 2018. Following this, the asset rate fell from $ 6,000 to $ 3,200. The data was published by the analytical service skew in his Twitter account.
Deev continued that between the end of the year, investments in the dollar have greater potential. However, it is worth investing in it only if the currency is needed for any purpose, for example, for a tourist trip or study abroad. Otherwise, you can lose on course fluctuations.
“Over this period, the potential for investment is greater, of course, with the dollar. But buying it without a goal, without having a financial strategy is a rather risky occupation, you can lose money when the exchange rate fluctuates. Now the value of the dollar is growing due to speculative factors in the market, the currency pair may soon stabilize and return to 69-70 rubles paired with the dollar (unless additional negative factors appear), and buyers will lose money, ”said Deev.
Berezin added that the dollar is unlikely to continue to go up in the near future. However, buying foreign currency for medium and long term goals is a “good idea”. Over long distances, USD wins against the ruble, and up to half of the capital can be invested in it.
The expert said that bitcoin can be part of the foreign exchange portfolio. Operations with BTC mainly occur in pairs to USD. Consequently, an investor who bought a digital asset for rubles will win twice in case of growth: from the rise in the price of both cryptocurrency and the dollar.
Experts agreed that in the medium and long term, both assets have growth potential. However, in the near future, the dollar is unlikely to continue to strengthen against the ruble; it was probably a temporary correction. Bitcoin is a risky asset in which more than 10% of the portfolio should not be invested.