Last month, the world’s largest bitcoin conference took place in San Francisco. Despite the massive rise of Bitcoin over the past two years, events concerning cryptocurrency are not covered by mainstream media compared to traditional tech conferences, such as Oracle World or Dream World. This is despite Bitcoin having a similar market cap as Oracle or SalesForce.
Bitcoin has proven to be a revolutionary digital asset despite the challenges it faces from the media, banks, and other traditional financial institutions, it. As a long-term investor, your investment would have grown 82-fold over the past decade if you had invested early in the market regardless of the bubble and crash. While some bought at the $19,000 peak, most of these were not long-term investors.
A large percentage of the speakers at the Bitcoin Conference, which occurred in the last week of June, are long-term investors in Bitcoin. There are a few reasons why the leading cryptocurrency would be a reliable long-term asset over the coming years, with the possibility that it could reach its peak as a new technology with mass adoption in seven to ten years.
Institutional Adoption and Bitcoin
If Bitcoin is to become a revolutionary digital asset at a large scale, then it will need to gain institutional adoption. Bitcoin buyers are classified into two categories, those who trade the cryptocurrency and those who stockpile it with the aim of building long-term wealth. Although Bitcoin has been around for roughly a decade, most experts believe that the cryptocurrency would reach the height of its development by 2025.
Some traditional institutional investors have been wary of Bitcoin due to the volatile nature of the cryptocurrency. It is worthy to note that the volatility experienced by Bitcoin is not entirely new as it has been and is still seen across the majority of startups. For instance, similar volatility is currently being experienced in the demand and supply of other nascent technologies such as autonomous vehicles and 5G, but the inflow and outflow of interest is not as easily traceable.
For institutional investors, the biggest challenge hindering their involvement in cryptocurrencies is the presence of secure custody. Most of the investors do not fancy a financial world run in a decentralized manner, and they would be more comfortable venturing into the sector if they know that cryptocurrency assets are safe, insured and secure. This can be achieved if there are custody options that store cryptocurrencies according to SEC regulations.
In 2019, many emerging custody solutions have been venturing into the cryptocurrency market. Over the past five months, six new custodians entered the sector while a number of the existing ones have announced new features to ensure they continue serving the institutional investors in the market. Cryptocurrency exchanges such as Coinbase, Gemini, and itBit have all launched custodian solutions as they seek to encourage more institutional investors to venture into the cryptocurrency market.
Bitcoin Futures Coming this Month, Fidelity to Boost the Bitcoin Space
More institutional financial investors are venturing into the cryptocurrency sector due to better custody solutions. The Chairman of Intercontinental Exchange (ICE) and Founder of the New York Stock Exchange (NYSE), Jeff Sprecher, revealed that they are working with some other international exchanges to put in place a federally-regulated crypto ecosystem.
The consortium includes Microsoft, Starbucks, and the Boston Consulting Group. They are utilizing ICE’s trading infrastructure to address the needs of retail and institutional investors and consumers. This latest development could pave the way for baby boomers to put their 401K into Bitcoin and make it possible for a long-awaited Bitcoin ETF to be launched.
Bakkt, the venture launched by the consortium, is set to launch its physically-settled bitcoin futures products for testing this month (July). Bakkt will mostly focus on providing custodial services to institutional clients.
In addition to this, Fidelity, one of the largest asset management firms in the world, is already offering cryptocurrency services for select clients. The CEO of the company, Abigail Johnson, has been a believer in Bitcoin over the past two years.
They created the Fidelity Digital Assets platform last year, and are investing in cryptocurrency startups such as Fireblocks. According to a survey by Fidelity, 22 percent of the 450 financial institutions it interviewed revealed that they already own cryptocurrencies, with many aiming to double their investment over the next five years.
Bitcoin Still Trumps Libra Coin
Libra, the cryptocurrency created by social media giant Facebook, created a buzz in the tech space over the past few weeks. However, according to Tim Draper, Bitcoin remains the superior cryptocurrency.
According to the founding partner of Draper Fisher Jurvetson, Libra coin has significant drawbacks, including the fact that it relies on fiat currencies and is controlled by Facebook, a platform that isn’t big on privacy. However, there is a belief that Libra is still a good thing for the crypto space as it will normalize the use of crypto.
According to a report by Bitwise, which was published by SEC, roughly 95 percent of crypto volume recorded by unregulated cryptocurrency exchanges are fake. Therefore, there is still work to be done for the cryptocurrency market to attain a high level of accountability. Institutional adoption will be an important phase for bitcoin and will help bitcoin maintain price support.