Yesterday, I am afraid that it will be another day for some investors to beat their chests.
On June 5, 2023, the Nikkei hit a new high since July 1990, surpassing 32,000 for the first time.
Take a look at the picture, isn’t it just a matter of kicking the accelerator to the peak 33 years ago?
According to the statistics, the Nikkei 225 index has increased by 23.46% this year.
There are also some pictures, which seem to be ready to go, ready for a new launch, such as spot gold.
Oh, and there is another one that may have been sidelined by many people-Bitcoin.
The picture is indeed not as exciting as the previous two, but according to the calculator, as of June 5, 2023, the cumulative increase of Bitcoin in 2023 has reached 60.6%, which is the most embarrassing one.
The investment circle has reached a consensus in recent years: Aside from the "political ambition" of Bitcoin back then,** its role that is mentioned more often now is - digital gold. **
People often say, "Confidence is more important than gold." Gold has always been an important safe-haven asset, at least a very important anchor, but whether Bitcoin is such an anchor, many people may still have a question mark in their hearts .
But guess what the analysts said?
According to analysts at AllianceBernstein, **Bitcoin is a shield against economic disorder and the adverse consequences of excessive monetary and fiscal intervention. **
Goldman Sachs predicts that Bitcoin could eventually reach $100,000 if investors accept its use as "digital gold."
As for the feeling that the risk of bitcoin volatility is too great (the ratio is always discounted in half), there is a calculation that is also encouraging:
According to calculations by Morningstar Inc., investors who have allocated 1% of Bitcoin in a traditional 60/40 portfolio (that is, 60% of S&P 500 stocks and 40% of 10-year U.S. Treasury bonds) have spent more than 1% of their investment in Bitcoin over the past year. Mid-year returns would be slightly lower -- down 8.93%, compared to 8.77% for a traditional 60/40 portfolio.
Those numbers aren’t scary considering Bitcoin has plummeted nearly 40% in that time.
And over longer periods of time, a 1% Bitcoin allocation will boost returns substantially. A 1% bitcoin portfolio handily beat a traditional 60/40 portfolio — between 13.3% and 7.8% per annum — over the 10 years to March.
The slightly larger 2% allocation performed slightly worse over the past year (down about 9%), but gained nearly 18% annually over the 10-year period.
**One more point is also worthy of supplementary information, that is, most of the people who trade Bitcoin are young people. **
Taking South Korea as an example, there have been media reports that the population of South Korea aged 20-39 is about 13.421 million, and the number of people holding virtual currency is 3.08 million, accounting for 23%, that is, among the five young Koreans, there are 1 person is speculating in coins.
According to the 2021 data of Paxful, an instant bitcoin transaction software, the main group who use them is between the ages of 25 and 33, accounting for 32.76% of all traffic, of which 18 to 24 years old account for 32.21% of all traffic.
** In the future, they will be an important investment force, which also means that the future of Bitcoin will not be just an option for "niche investment". **
So, is it time to add Bitcoin to your investment portfolio?
Don't worry, let's take a look at the opinions of several experts and scholars.
Gold is a natural currency and a store of wealth, and Bitcoin is a virtual electronic currency. Young investors are definitely more optimistic about Bitcoin, but Bitcoin is prone to large-scale fluctuations in the market, and most sovereign countries do not recognize the legal status of Bitcoin, so the existence of Bitcoin often has some dark sides, and it is easy to become the hardest hit area for money laundering .
**I personally think that gold must be allocated, but Bitcoin is not necessary. **
We see that the central banks of various countries are frantically buying gold. This amount is scary. In the first quarter of this year, the global central bank’s gold reserves increased by 228 tons, which is the highest increase in reserves in the first quarter of all years since records were kept.
We can use the word "whale" to describe the state of central banks' gold reserves. The central banks of various countries continue to hoard gold to resist risks. As the saying goes, buy gold in troubled times, and make antiques in prosperous times. Now the price of antiques has plummeted, but gold has gradually become the main product of the central bank reserves of various countries, and it is more the result of the conflict between Russia and Ukraine.
Russia's various foreign exchange reserves have encountered unprecedented pressure and bottlenecks. So this incident suddenly made many countries think that gold reserves are becoming more and more important. Everyone is afraid that foreign exchange reserves will be suppressed, and buying gold is a strong support for national currency preservation.
The latest news is that the acceleration of "de-dollarization" has slowly begun in many countries. I think that under the general trend of de-dollarization, all countries will invariably choose to hoard gold as a guarantee against some risks.
**In fact, it is related to the fact that the United States is too domineering. Other countries dare not speak out against the hegemony of the dollar. **But where there is monetary oppression, there is resistance, and there is already a little bit of this tendency.
It should be said that the abuse of dollar hegemony will first drive the BRICS countries to jointly create a new world currency. The Asian Clearing Union ACU, composed of nine Asian countries including Iran, India, and Bangladesh, will launch a new cross-border financial settlement system in June this year, which will serve as a replacement for the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system.
The 51st Asian Clearing Union (ACU) Summit
Source: Foreword from Asia
Of course, China did not participate this time, because China has already been secretly preparing to replace the US dollar, mainly because the hegemonic behavior of the United States has stimulated dissatisfaction in many countries and hindered the circulation and use of currencies in many countries. The fundamental reason is to form such an anti-dollar alliance.
In fact, ACU was established in 1974, but in recent years, the relevant government has not continued the past policy, but this kind of secret resistance has always existed, just lacking a spark to ignite the prairie fire.
**I believe that at the same time as the launch of the Asian Clearing Union, there will be germs of "de-dollarization" taking shape. **
In the process of transferring the debt risk of the United States to other countries, many countries such as India and Japan experienced decades of economic regression. Therefore, in order to avoid this situation, more and more economies will put "de-dollarization" on the agenda and make plans.
The trend of Bitcoin is closely related to factors such as the global economic cycle, the cycle of the U.S. dollar, and the attitudes of major national monetary authorities towards cryptocurrencies.
Bitcoin topped $60,000. After the outbreak of the epidemic and the release of the U.S. dollar, the growth rate of the U.S. dollar’s broad currency M2 once reached 25%, which is an important reason for Bitcoin’s record high.
Later, the U.S. dollar entered a cycle of rapid interest rate hikes and balance sheet shrinkage, and the Bitcoin bubble burst, falling to around $16,000 at one point. The recent rebound of Bitcoin to around $27,000 is related to the end of the US dollar interest rate hike and the general rebound of global stock markets.
**Gold and Bitcoin are similar, both are safe-haven assets, and they both follow the opposite trend of the US dollar. **
But gold and Bitcoin are in a competitive relationship. If there is no gold, the price of Bitcoin will perform better; conversely, if there is no Bitcoin, the price of gold will be higher. The emergence of cryptocurrencies such as Bitcoin has diverted the safe-haven function of gold and also curbed the height of gold prices.
**Ordinary people do need to pay attention to the price trend of gold and cryptocurrencies. **Physical gold and cryptocurrency provide an important way to avoid taxes and transfer assets.
The buying of gold by the central banks of various countries also sees that the US dollar interest rate hike is coming to an end, and the trend of gold may rebound. However, in April, the amount of gold purchased by the People's Bank of China decreased significantly, and may gradually suspend the purchase of gold in the next two months (May or June).
The long-arm jurisdiction and financial bullying behavior of the United States have made many countries hope to "de-dollarize", and there have been many cases this year. But it's a long process that takes years of hard work. China increased its holdings of U.S. debt in March, ending seven consecutive months of reducing its holdings, which shows that "de-dollarization" has repeated and is difficult.
For most investors, the biggest enemy in the long-term investing process is excessive volatility. I think ordinary investors should have a very core logic, which is called "persist for high-probability events and prepare for small-probability events." **
What is the high probability event? That is, the whole world is still on the path of peace and development. In this direction, in fact, according to the traditional asset allocation in the past, such as the stock market and the bond market are still options worth considering. This is also the mainstream of most Chinese people. investment trends.
Small-probability events are similar to situations like the Russia-Ukraine conflict. In order to prevent small-probability events from having a major impact on household assets and make our family investment portfolios more anti-fragile, we should properly allocate safe-haven assets.
For investors with a certain amount of funds, gold can be added to the asset allocation portfolio, because gold has a relatively large non-correlation with the stock market and bonds, so that the entire family's asset portfolio has better stability and smooth fluctuations . To the extent that the risk can be tolerated, consider some digital assets. The east is not bright, the west is bright, and the combination of multiple diversification is used to reduce fluctuations.
Some people call Bitcoin digital gold, but what needs to be reminded is that assets like Bitcoin have high volatility and many speculators. As far as individual investors are concerned, they must keep their eyes open, have a full awareness and understanding of risks, and do not invest too much.
In the past, individual investors may only focus on a single type of asset. For example, most people in China only focus on real estate, and most Americans will allocate to markets such as the S&P 500.
In the past, asset allocation is a very important means for ordinary people to achieve long-term wealth appreciation. The core essence is to allocate your assets in different categories, and the long-term return rate is also good.
In the short term, the central banks of various countries buy gold, first of all out of the starting point of financial stability, to ensure the health of the balance sheets of various countries; in the long run, the world's trust in the US dollar has declined in the past ten years. The US dollar is equal to gold, which is a global consensus after the disintegration of the Bretton Woods system.
But this consensus is not so strong now, so people need more value-preserving, anchors that can stabilize the finances of various countries and currencies of various countries. Gold is currently the most mainstream choice.
** "De-dollarization" is a definite trend in the long-term perspective of ten or twenty years. **Because the whole world will develop in the direction of multi-polarization, there will be various forms of currency competing for the status of global value storage.
In the short term, due to various forms of instability in the past two years, the phenomenon of "de-dollarization" has not been so serious. Because in this case, many people will trust the dollar because they have no choice. So I think the long-term and short-term "de-dollarization" phenomena have different trends.
The global economic downturn is basically a foregone conclusion. If we want to get out again, I think we need to look at three aspects.
▶▷** First, what is the trend of the conflict between Russia and Ukraine. **
**▶▷****Second, whether the Sino-US competition situation has eased or even reconciled. **
▶▷** Third, whether the new technology industry can really exist for a long time. **
Generally speaking, in the process of global economic turmoil, gold is always bought in troubled times, and it can play a role in preserving value.
Now Bitcoin is also known as digital gold, so after binding the concept of gold, it can also be used as one of the ways to preserve value in troubled times.
However, physical gold and Bitcoin are not currencies after all, and they are not convenient for trading and realization. Therefore, when investors buy gold or Bitcoin, they must fully consider the issue of capital liquidity.
The excessive issuance of the US dollar may make the US dollar depreciate and become worthless waste paper.
The confidence of the central banks of various countries that used the U.S. dollar as their main reserve currency has been shaken. Especially after the epidemic, the debt crisis has turned bank failure from worry to reality, so central banks of various countries use gold as a reserve and use it as a safe-haven asset.
Countries generally have the desire to "de-dollarization", but the strength is not enough, and it will take a long time.
We also need to "de-dollarize", but we still can't do the dollar right now. At this time, we must hide our strength and bide our time to strengthen our China's strength.
**From a strategic point of view, it is necessary to "de-dollarize", but from a tactical point of view, it cannot be mentioned too much. **
If you want to "de-dollarize", the entry point is the trading of commodities. How to make the new trading mechanism, especially the currency mechanism no longer anchored to the US dollar is the key.
But it is very difficult to find such a cracking mechanism at present. Bitcoin can accelerate the process of "de-dollarization", but the total number is only 21 million, and its effect is very limited.
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The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
Time to Add Bitcoin to Your Portfolio?
Yesterday, I am afraid that it will be another day for some investors to beat their chests.
On June 5, 2023, the Nikkei hit a new high since July 1990, surpassing 32,000 for the first time.
Take a look at the picture, isn’t it just a matter of kicking the accelerator to the peak 33 years ago?
According to the statistics, the Nikkei 225 index has increased by 23.46% this year.
There are also some pictures, which seem to be ready to go, ready for a new launch, such as spot gold.
Oh, and there is another one that may have been sidelined by many people-Bitcoin.
The picture is indeed not as exciting as the previous two, but according to the calculator, as of June 5, 2023, the cumulative increase of Bitcoin in 2023 has reached 60.6%, which is the most embarrassing one.
The investment circle has reached a consensus in recent years: Aside from the "political ambition" of Bitcoin back then,** its role that is mentioned more often now is - digital gold. **
People often say, "Confidence is more important than gold." Gold has always been an important safe-haven asset, at least a very important anchor, but whether Bitcoin is such an anchor, many people may still have a question mark in their hearts .
But guess what the analysts said?
According to analysts at AllianceBernstein, **Bitcoin is a shield against economic disorder and the adverse consequences of excessive monetary and fiscal intervention. **
Goldman Sachs predicts that Bitcoin could eventually reach $100,000 if investors accept its use as "digital gold."
As for the feeling that the risk of bitcoin volatility is too great (the ratio is always discounted in half), there is a calculation that is also encouraging:
According to calculations by Morningstar Inc., investors who have allocated 1% of Bitcoin in a traditional 60/40 portfolio (that is, 60% of S&P 500 stocks and 40% of 10-year U.S. Treasury bonds) have spent more than 1% of their investment in Bitcoin over the past year. Mid-year returns would be slightly lower -- down 8.93%, compared to 8.77% for a traditional 60/40 portfolio.
Those numbers aren’t scary considering Bitcoin has plummeted nearly 40% in that time.
And over longer periods of time, a 1% Bitcoin allocation will boost returns substantially. A 1% bitcoin portfolio handily beat a traditional 60/40 portfolio — between 13.3% and 7.8% per annum — over the 10 years to March.
The slightly larger 2% allocation performed slightly worse over the past year (down about 9%), but gained nearly 18% annually over the 10-year period.
**One more point is also worthy of supplementary information, that is, most of the people who trade Bitcoin are young people. **
Taking South Korea as an example, there have been media reports that the population of South Korea aged 20-39 is about 13.421 million, and the number of people holding virtual currency is 3.08 million, accounting for 23%, that is, among the five young Koreans, there are 1 person is speculating in coins.
According to the 2021 data of Paxful, an instant bitcoin transaction software, the main group who use them is between the ages of 25 and 33, accounting for 32.76% of all traffic, of which 18 to 24 years old account for 32.21% of all traffic.
** In the future, they will be an important investment force, which also means that the future of Bitcoin will not be just an option for "niche investment". **
So, is it time to add Bitcoin to your investment portfolio?
Don't worry, let's take a look at the opinions of several experts and scholars.
Gold is a natural currency and a store of wealth, and Bitcoin is a virtual electronic currency. Young investors are definitely more optimistic about Bitcoin, but Bitcoin is prone to large-scale fluctuations in the market, and most sovereign countries do not recognize the legal status of Bitcoin, so the existence of Bitcoin often has some dark sides, and it is easy to become the hardest hit area for money laundering .
**I personally think that gold must be allocated, but Bitcoin is not necessary. **
We see that the central banks of various countries are frantically buying gold. This amount is scary. In the first quarter of this year, the global central bank’s gold reserves increased by 228 tons, which is the highest increase in reserves in the first quarter of all years since records were kept.
We can use the word "whale" to describe the state of central banks' gold reserves. The central banks of various countries continue to hoard gold to resist risks. As the saying goes, buy gold in troubled times, and make antiques in prosperous times. Now the price of antiques has plummeted, but gold has gradually become the main product of the central bank reserves of various countries, and it is more the result of the conflict between Russia and Ukraine.
Russia's various foreign exchange reserves have encountered unprecedented pressure and bottlenecks. So this incident suddenly made many countries think that gold reserves are becoming more and more important. Everyone is afraid that foreign exchange reserves will be suppressed, and buying gold is a strong support for national currency preservation.
The latest news is that the acceleration of "de-dollarization" has slowly begun in many countries. I think that under the general trend of de-dollarization, all countries will invariably choose to hoard gold as a guarantee against some risks.
**In fact, it is related to the fact that the United States is too domineering. Other countries dare not speak out against the hegemony of the dollar. **But where there is monetary oppression, there is resistance, and there is already a little bit of this tendency.
It should be said that the abuse of dollar hegemony will first drive the BRICS countries to jointly create a new world currency. The Asian Clearing Union ACU, composed of nine Asian countries including Iran, India, and Bangladesh, will launch a new cross-border financial settlement system in June this year, which will serve as a replacement for the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system.
The 51st Asian Clearing Union (ACU) Summit
Source: Foreword from Asia
Of course, China did not participate this time, because China has already been secretly preparing to replace the US dollar, mainly because the hegemonic behavior of the United States has stimulated dissatisfaction in many countries and hindered the circulation and use of currencies in many countries. The fundamental reason is to form such an anti-dollar alliance.
In fact, ACU was established in 1974, but in recent years, the relevant government has not continued the past policy, but this kind of secret resistance has always existed, just lacking a spark to ignite the prairie fire.
**I believe that at the same time as the launch of the Asian Clearing Union, there will be germs of "de-dollarization" taking shape. **
In the process of transferring the debt risk of the United States to other countries, many countries such as India and Japan experienced decades of economic regression. Therefore, in order to avoid this situation, more and more economies will put "de-dollarization" on the agenda and make plans.
The trend of Bitcoin is closely related to factors such as the global economic cycle, the cycle of the U.S. dollar, and the attitudes of major national monetary authorities towards cryptocurrencies.
Bitcoin topped $60,000. After the outbreak of the epidemic and the release of the U.S. dollar, the growth rate of the U.S. dollar’s broad currency M2 once reached 25%, which is an important reason for Bitcoin’s record high.
Later, the U.S. dollar entered a cycle of rapid interest rate hikes and balance sheet shrinkage, and the Bitcoin bubble burst, falling to around $16,000 at one point. The recent rebound of Bitcoin to around $27,000 is related to the end of the US dollar interest rate hike and the general rebound of global stock markets.
**Gold and Bitcoin are similar, both are safe-haven assets, and they both follow the opposite trend of the US dollar. **
But gold and Bitcoin are in a competitive relationship. If there is no gold, the price of Bitcoin will perform better; conversely, if there is no Bitcoin, the price of gold will be higher. The emergence of cryptocurrencies such as Bitcoin has diverted the safe-haven function of gold and also curbed the height of gold prices.
**Ordinary people do need to pay attention to the price trend of gold and cryptocurrencies. **Physical gold and cryptocurrency provide an important way to avoid taxes and transfer assets.
The buying of gold by the central banks of various countries also sees that the US dollar interest rate hike is coming to an end, and the trend of gold may rebound. However, in April, the amount of gold purchased by the People's Bank of China decreased significantly, and may gradually suspend the purchase of gold in the next two months (May or June).
The long-arm jurisdiction and financial bullying behavior of the United States have made many countries hope to "de-dollarize", and there have been many cases this year. But it's a long process that takes years of hard work. China increased its holdings of U.S. debt in March, ending seven consecutive months of reducing its holdings, which shows that "de-dollarization" has repeated and is difficult.
For most investors, the biggest enemy in the long-term investing process is excessive volatility. I think ordinary investors should have a very core logic, which is called "persist for high-probability events and prepare for small-probability events." **
What is the high probability event? That is, the whole world is still on the path of peace and development. In this direction, in fact, according to the traditional asset allocation in the past, such as the stock market and the bond market are still options worth considering. This is also the mainstream of most Chinese people. investment trends.
Small-probability events are similar to situations like the Russia-Ukraine conflict. In order to prevent small-probability events from having a major impact on household assets and make our family investment portfolios more anti-fragile, we should properly allocate safe-haven assets.
For investors with a certain amount of funds, gold can be added to the asset allocation portfolio, because gold has a relatively large non-correlation with the stock market and bonds, so that the entire family's asset portfolio has better stability and smooth fluctuations . To the extent that the risk can be tolerated, consider some digital assets. The east is not bright, the west is bright, and the combination of multiple diversification is used to reduce fluctuations.
Some people call Bitcoin digital gold, but what needs to be reminded is that assets like Bitcoin have high volatility and many speculators. As far as individual investors are concerned, they must keep their eyes open, have a full awareness and understanding of risks, and do not invest too much.
In the past, individual investors may only focus on a single type of asset. For example, most people in China only focus on real estate, and most Americans will allocate to markets such as the S&P 500.
In the past, asset allocation is a very important means for ordinary people to achieve long-term wealth appreciation. The core essence is to allocate your assets in different categories, and the long-term return rate is also good.
In the short term, the central banks of various countries buy gold, first of all out of the starting point of financial stability, to ensure the health of the balance sheets of various countries; in the long run, the world's trust in the US dollar has declined in the past ten years. The US dollar is equal to gold, which is a global consensus after the disintegration of the Bretton Woods system.
But this consensus is not so strong now, so people need more value-preserving, anchors that can stabilize the finances of various countries and currencies of various countries. Gold is currently the most mainstream choice.
** "De-dollarization" is a definite trend in the long-term perspective of ten or twenty years. **Because the whole world will develop in the direction of multi-polarization, there will be various forms of currency competing for the status of global value storage.
In the short term, due to various forms of instability in the past two years, the phenomenon of "de-dollarization" has not been so serious. Because in this case, many people will trust the dollar because they have no choice. So I think the long-term and short-term "de-dollarization" phenomena have different trends.
The global economic downturn is basically a foregone conclusion. If we want to get out again, I think we need to look at three aspects.
▶▷** First, what is the trend of the conflict between Russia and Ukraine. **
**▶▷****Second, whether the Sino-US competition situation has eased or even reconciled. **
▶▷** Third, whether the new technology industry can really exist for a long time. **
Generally speaking, in the process of global economic turmoil, gold is always bought in troubled times, and it can play a role in preserving value.
Now Bitcoin is also known as digital gold, so after binding the concept of gold, it can also be used as one of the ways to preserve value in troubled times.
However, physical gold and Bitcoin are not currencies after all, and they are not convenient for trading and realization. Therefore, when investors buy gold or Bitcoin, they must fully consider the issue of capital liquidity.
The excessive issuance of the US dollar may make the US dollar depreciate and become worthless waste paper.
The confidence of the central banks of various countries that used the U.S. dollar as their main reserve currency has been shaken. Especially after the epidemic, the debt crisis has turned bank failure from worry to reality, so central banks of various countries use gold as a reserve and use it as a safe-haven asset.
Countries generally have the desire to "de-dollarization", but the strength is not enough, and it will take a long time.
We also need to "de-dollarize", but we still can't do the dollar right now. At this time, we must hide our strength and bide our time to strengthen our China's strength.
**From a strategic point of view, it is necessary to "de-dollarize", but from a tactical point of view, it cannot be mentioned too much. **
If you want to "de-dollarize", the entry point is the trading of commodities. How to make the new trading mechanism, especially the currency mechanism no longer anchored to the US dollar is the key.
But it is very difficult to find such a cracking mechanism at present. Bitcoin can accelerate the process of "de-dollarization", but the total number is only 21 million, and its effect is very limited.