Posted in: Thursday, October 28, 2021 – 9:10 PM | Last update: Thursday, October 28, 2021 – 9:10 PM
Bitcoin regained its vitality after China’s decision to ban dealing with it, and the price of Bitcoin rose again, achieving a historical high of about 65 thousand dollars per bitcoin, or one million and seven thousand Egyptian pounds. If we put this number in an aggregate context, meaning the number of bitcoins in the world, which is about 21 million, the virtual value covered by this electronic currency alone becomes about 1.3 trillion dollars. With the addition of all encrypted electronic currencies, the most important of which is Ethereum, the size of the cryptocurrency market exceeds 2.5 trillion US dollars. This is equivalent to the size of England’s economy in 2020 ($2.64 trillion), India ($2.59 trillion), France ($2.55 trillion), or the Arab countries combined ($2.35 trillion). Because the price of Bitcoin fluctuates wildly, the reliability of this hypothetical value is not on solid ground. By reviewing the cryptocurrency market at the beginning of this year, the total market value was at the level of 800 to 830 billion dollars, and now it has made a jump of more than 230 percent to 2.5 trillion dollars, and this in itself is a cause for concern. Most of the price spikes in cryptocurrency prices stem from a fundamental characteristic, which is the relationship of these currencies to the real (non-digital) economy. In other words, how can Bitcoin and similar cryptocurrency be used for trade exchange, trade remittances, and cash flows. The more legitimate countries dye these encrypted electronic currencies, the more stable their prices and the less violent jumps the market is witnessing. And let’s remember that the price of Bitcoin was at the level of 33,000 dollars only three months ago. Many people thought China’s decision to ban cryptocurrency trading would confirm the general downward trend in the price of Bitcoin, but the reality has been against expectations.
What happened and made Bitcoin reach new highs is the entry of one of the important, medium-sized funds to invest in Bitcoin. The fund is called Pro-Share, and it is a special type of investment fund known as an “exchange-traded fund”. This type does not invest directly in Bitcoin, but invests in futures markets that speculate about the price of Bitcoin. Hence it has an indirect effect on Bitcoin. To clarify the idea of future markets, it is a type of trading market, which works by speculating on the price of a currency such as Bitcoin or the price of a stock such as the Facebook stock. The prices that are traded in the future markets are an indication of what the Bitcoin price will be in the coming period. Usually future contracts range from days, weeks, or months. Let us give an example so that the picture becomes clear to the reader and the non-specialist reader. If the bitcoin price now ranges between 63 thousand and 64 thousand dollars on the cryptocurrency exchange, the future market will speculate on the price of bitcoin tomorrow, next week, or next month. If the price traded in the futures market exceeds 64 thousand dollars, let it be 67 thousand dollars, this means that the market view of the price of bitcoin is positive. And if the price in the futures contracts is $50 thousand, this means that the market’s assessment of the price of Bitcoin is much lower than its current price. The current market then takes some indicators from the future markets. There is also another feature of entering an investment fund to invest in the price of bitcoin, which is providing the opportunity for dealers in the official markets to indirectly invest in bitcoin. Shares of Pro-Share can be obtained, starting at just $41. It is a price within reach of investors and speculators, which facilitates the trading process. The effect of this fund was reflected on the bitcoin price in an instant way, and the price went to historical levels. But it should not be assumed that this rise is permanent. Rather, it is a positive indicator from the trading market that will take its time and then fade away.
As for the ProShares investment fund itself (ProShares), it is owned by the ProFund group, which it created in 1997 with a capital of 100,000 dollars, and now it has a market value of 53 billion dollars in 2021. Note the size of the jump in the market value of the fund over the course of A quarter of a century, which suggests that it deals with investment opportunities with high risks and high returns at the same time. The fund invests in 140 financial products, most recently Bitcoin. For information, there are reservations on Wall Street about the work of a fund to speculate on the price of Bitcoin in the future markets. The Pro-Fund Company itself was set up by Louis May-Berg and Michael Sieber. The latter is known as a real estate developer. As for the first, here is a brief profile of Louis May-Berg from the May-Berg family website, who says that his career spans more than 38 years in the financial services and investment industries, and he is one of the founders of Pro-Share, and serves as President of the Pro-fund. He is a graduate of George Washington University, and is a member of one of its institutions, the Foundation for Jewish Life on Campus. Among his most influential initiatives are the Momentum initiative, an initiative to “challenge the innovation of Jewish education,” and the Mayberg Center initiative for “Jewish education and leadership.” As one of the Mayberg Trustees, Lewis is active in the field of community service through volunteering, and he sits on the boards of directors of various organizations in the United States and around the world, including the “Is Ha Torah” foundation concerned with teaching Jewish law and advocating the Zionist movement and the State of Israel. This does not mean that bitcoin or cryptocurrencies are linked to the personal goals of those who create investment funds, but those who open the door to bitcoin should be alerted to legalize their conditions, as the picture may become somewhat clear.
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