Michael Wu of Amber Group, the digital assets financial service firm, believes that Bitcoin has crossed bubble out of the territory for good and that Bitcoin mainstream adoption is going to lead the digital assets market to new heights.
In an interview with CNBC, Wu offered how he sees the future of the market as an industry which is only just taking off and that the fundamentals are all in place for the market to surge.
The boom of DeFi
Wu suggested that the narrative of Bitcoin being a better form of gold is the worst-case scenario for the cryptocurrency market. He added that Bitcoin is superior to gold as an inflation hedge and as a storage of wealth and institutions are starting to see that and act on it. With the boom of the decentralised finance (DeFi) ecosystem, there is now tens of billions of dollars are locked in the DeFi system managed by smart contracts rather than central institutions.
“So now you have things coming out of the left and the right – new business models and new inventions in this crypto finance world. So I think the fundamentals are already here. It’s just that it will take time for people to understand them and for the market to digest them.”
Wu: Bitcoin not a bubble
The CEO of Amber Group said that he thinks that there is too much attention on the market now, with institutions, whales and retailers investing in the cryptocurrency industry to refer to the token’s rise as a bubble that will burst. He suggested that there’s validity for doubt and uncertainty from new investors or those who don’t believe in the overall stability of Bitcoin because of the absence of understanding. He said:
“In the early stage, that kind of understanding, that kind of skepticism, always comes with a lot of price volatility. However, I don’t think you can call Bitcoin a bubble anymore, because, like I mentioned earlier, you have all these institutions, all these billionaires, multi multi-billion-dollar listed companies, all these, you know, all these newcomers into crypto. They’re buying Bitcoins, they’re buying crypto and there are only 21 million Bitcoins out there.”
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To understand investment is to understand risk. A good way to think of risk is the chance that something will go wrong, and you will be the one who loses out. To manage risk is to accept that some things are bound to go wrong, and that you are prepared for them. Investing refers to putting your money into an effort or project, expecting that it will bring returns in the future, hopefully a large return. Some people describe investing as creating a “business” and others think of it as a means of earning a living.
Growth investment is a kind of long-term investors’ concept. The main idea behind growth investment is that stock prices tend to rise, especially if there are good reasons to believe that the company’s future growth prospects are likely. Investors usually feel that the best place to put their money is in assets like property and other stocks that have a long period of time (usually four to five years) to run. There are also some very low risk investments in developed countries, as well as in emerging markets like Brazil.
Another type of investment is what is called a defensive investment. This is when you invest because the current market or economy is doing well, but you don’t expect to lose much money in the near future, or to suffer any sort of loss at all. Examples of this include agricultural stocks and bonds. Growth investing is very similar to this. Sometimes the difference between the two is that you are potentially losing value in a defensive portfolio, whereas with a growth portfolio you are not.
Speculation is the act of using the market to trade a particular asset, in hopes that it will increase in value in order to make a profit. This can take many forms, such as creating the fictitious asset, often called a risk derivative, to trade with. Speculation generally is used to make bets about future events, instead of trying to predict the actual results of events in an exact detail. So, if you bet on a horse race, you are speculating on whether or not the horse will win. If you believe the odds are in your favor, you’ll probably make a profit.
Another form of investment vehicle is foreign currency trading. These types of investments involve trading one currency for another, for example, the British pound with the American dollar, and therefore you would be buying British currency in the US dollar. Most foreign currency investments are made by large financial institutions and other companies who have larger capital and financial resources. The risk of these types of investments is high, as there is the chance that the value of the currency you are buying could fall significantly. They are not considered to be high risk investments, but are considered as such based on the fact that the effects of the economic growth and changes in government may change the value of the currency.
An investment is not an asset or a liability. It is an action that generates income (the value of the asset) or provides some other benefit (the value of the benefit). An investment is different from an asset because an asset does not necessarily need to be used or produced, while an investment always concerns the outlay of some asset today. The outlay of the investment will determine whether or not the asset will generate income or not.