2020 was great for bitcoin but experts are wary of a correction

Bitcoin has ended 2020 with a bang. Extending its recent run-away rally, the digital currency breached $33,000 for the first time ever on Friday. Unlike in the past, bitcoin has now caught the fancy of institutional investors and is gaining acceptance as a futuristic store of value. Global fund manager survey by BofA Securities showed “long bitcoin” was the third most crowded trade in December, beating gold and corporate bonds.

Bitcoin is now being perceived as an inflation-hedge and an asset with a potential to give mouth-watering returns quickly, analysts said. Bitcoin has almost quadrupled in value this year, outperforming safe havens gold and the US dollar. Foreign research house Jefferies has, for the first time, included bitcoins in its asset allocation for pension funds. It has cut allocation to gold by 5% in favour of bitcoin.

However, as they say, one man’s food is another’s poison. Legendary investor Warren Buffett has referred to bitcoin as “rat poison squared” and has said he does not see crypto currencies as an investment-worthy asset class.