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Predrag V

Bitcoin price

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Hi Predrag, thanks for the question.

Bitcoin looks well-positioned to continue surging higher in June. When I look at the price action in Bitcoin in May, I see that the buyers keep coming back to test the resolve of the sellers, no matter how many times they are knocked down. This is a characteristic of persistent bulls, that usually yields results for them. 

This is despite Goldman Sachs, one of the biggest U.S. banks, outlined five reasons why you shouldn’t invest in Bitcoin. In a leaked slideshow, the bank said that Bitcoin “is not an asset class,” nor “a suitable investment.”

Accordingly, you shouldn’t invest in Bitcoin, as:

1. It doesn’t produce cash flow like bonds.

2. It doesn’t generate profit through exposure to global economic development.

3. Bitcoin doesn’t deliver consistent diversification gains due to unstable correlations.

4. It doesn’t increase volatility given historical volatility of 76%. The bank noted the case when Bitcoin plunged 37% in a single day, alleging that its volatility is off the charts. 

5. It provides no proof of hedging against inflation. 

“We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients. We also believe that while hedge funds may find trading cryptocurrencies appealing because of their high volatility, that allure does not constitute a viable investment rationale,” the bank wrote in a presentation. 

Despite the bank’s claims, Bitcoin jumped 4% on Friday to record another positive day. A move above $9,2000 allows Bitcoin buyers to target the key short-term resistance at $10.000. If broken, the path towards $10,300 and $10,500 would be open. Also, any above the latter creates a new 20-month high for the world’s largest digital coin.


 

Edited by Tarik

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