Going by the Bank of Korea’s headship remarks (BOK) , cryptocurrencies such as Bitcoin have no intrinsic value, and their price swings are likely to experience greater volatility.
BOK Gov. Lee Ju-yeol told lawmakers that there is no intrinsic value in crypto assets.
The Latest Surge in Bitcoin is “Abnormal”
Some investors in the past have said that Bitcoin could be an alternative to gold hedging, but critics say the cryptocurrency frenzy is a bubble created by excess liquidity amid a pandemic.
When asked by lawmakers whether Bitcoin’s recent spike was temporary, Lee said that it’s very difficult to predict the price, but the price will be very volatile.
Bitcoin’s recent rally may result from several factors, including a bulk purchase from Tesla Inc. Elon Musk and institutional investors plan to use digital tokens as hedges, Lee said.
Describing Bitcoin’s recent spike as suspicious, Lee said it was difficult to understand why record-breaking rallies continued. He emphasized that the BOK does not want to buy bonds issued directly by the Korean government. If so, it would raise concerns about budget stability and undermine central bank confidence, Lee said.
Bitcoin, the largest cryptocurrency in the world, is valued at over $ 50,000 this month. In South Korea, Bitcoin surpassed 65 million stinks ($ 58,479).
South Korea has increased sales of government debt to reduce the effects of the pandemic. To stabilize the bond market, the Bank of Korea will actively buy government bonds; Lee told the legislature.
He adds that in the case of increased bond issuance, it will have a significant impact on financial markets. Because bond yields are expected to rise, BOK will be actively involved in government bond purchases.
Why Lee Could Be Wrong
Bitcoin is now poised as both a store of value and a tool for everyday transactions. Institutional investors seek to engage and take advantage of price volatility, even if governments worldwide, such as Japan, have made this a valid payment method for goods.
Bitcoin has unique characteristics, decentralization, lack of guidance, and the most censored currency together make Bitcoin something of great value to the planet. People must have an inventory of value beyond the control of the government and their potentially oppressive institutions.
Another point to consider is that there are only 21 million bitcoins. It generally means that there is a limited number of them available for indiscriminate distribution. What this means is there is a known scarcity of units, something that carries a monetary value. It is very similar to gold, whose value dramatically. The limited number of Bitcoin is known, which gives Bitcoin value. It provides insurance against worldwide fiat currencies.
Bitcoin represents a future with true financial freedom for everyone. Even if Bitcoin’s price is unpredictable, you can take over your life.