Bitcoin has successfully shattered previous records and reached $23,000 today following an increase in institutional adoption. Currently, the number of Bitcoin addresses holding at least $1 million in BTC has reached 66,540 due to the recent price rally. This data was provided by Glassnode, a crypto analytics, and on-chain analysis firm, after the significant surge in BTC price.
While Bitcoin celebrates new heights, USD falls further back for the first time in 2 years, even with the global economic uncertainty. Throughout this year, the USD index has dropped by 7% from around 97 to its current level of 89.96. And this births the question:
Can Bitcoin Replace Fiat Currency as a store of value?
Ordinarily, when someone desires financial stability, they go for safe assets, such as gold, real estate, or other globally dominant currency. But with the current global pandemic and the global economy suffering fiat inflation, many institutions and individuals are beginning to see Bitcoin as a safer asset than its counterparts.
There are already a handful of institutions following this thought pattern, including MicroStrategy that owns over $700 million worth of BTC. The CEO of MicroStrategy, Michael Saylor, believes that it is safer for the company to have part of its treasury reserves in Bitcoin and not USD. He also regards Bitcoin as a better hedge against inflation.
Fortunately, Michael Saylor seems to be correct, as Bitcoin continues to rise even after surpassing its previous ATH price.
MassMutual, a well-known life insurance company in the US, has also announced plans to diversify its investment portfolio by purchasing about 5,600 BTC. According to JP Morgan’s research note, the bank is already expecting a $600 billion Bitcoin demand in the coming years.
The value of the US Dollar has reached its lowest level since two years ago. However, the decline in USD is another reason behind the increase in the price of BTC. Prominent cryptopreneurs and institutional investors already speculate that Bitcoin has the potential to replace the US Dollar.
Therefore, the recent crypto rallies should serve as a warning to government money printers around the world. And relevant authorities must not assume that traditional currencies like USD or Euro are the only mediums of exchange or stores of value that people will trust forever.