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Bitcoin's technical picture remains the same. The main cryptocurrency continues trading within a narrow range, causing a lot of uncertainties. While we are waiting for either a rise or a drop, let us take a look at bitcoin's prospects using the fundamental data.
The fundamental analysis of the crypto market is full of inaccuracies. The fact is that the market appeared not so long ago and the estimation criteria are controversial. However, from the general point of view, we can see that the mounting demand from big players will push the quotes higher. At the same time, the share of retail investors is also quite big.
Rising interest of big players could be explained by significant liquidity injections made by central banks in an attempt to protect the economy from the coronavirus. Fiat currencies are becoming less popular as safe-haven assets. Moreover, inflationary risks and uncertainties are increasing. That is why bitcoin is becoming a new safe-haven asset. In fact, it is a controversial issue.
Let us focus on a security factor. High volatility poses the main risk when investing in cryptocurrencies. In this case, traders may use hedge strategies to reduce their possible losses.
There are other risks of break-ins, thefts, and fraudulent schemes. It is not a rare thing in this sphere. Some days ago, someone stole cryptocurrencies worth $1.6 million. The scammers disguised their service as Trezor, a hardware wallet application. The customers who lost their money, found this app on the App Store. Apple noted that this fake application got there fraudulently. It was approved as an encryption service and turned into a phishing service.
The main problem is that cryptocurrencies cannot be insured unlike traditional assets. Insurance companies have just begun developing this strategy. There are many pitfalls in this case.
Those companies that already provide insurance of digital assets, emphasize that they cannot cover more than $750 million of losses. It is a really small sum compared to $1.5 billion invested by Tesla. Last year, losses from fraudulent schemes, hacking, and theft totaled $1.9 billion.
Small companies can receive insurance of $200 million if they have digital assets worth $10 billion.
Thus, the cryptocurrency is an unsecure safe-haven asset. As result, the problems with the full-fledged insurance may lead to lower demand from big and even retail traders.
At the moment, bitcoin is trading within the range of $58,340.66 - $59517.79 between the red and blue dotted lines. It is still difficult to predict whether the price will drop or reach a new all-time high.
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