What is the future of Bitcoin ?
The past couple of months were crucial for Bitcoin and the crypto market in general. We’ve hit the lowest BTC price for 2018, alts are bleeding while the total market cap went below 200 billion.
What are the reasons behind these dark times and what does the future holds for Bitcoin and the rest digital currencies? The following write-up will try to explain it all…
The Bitcoin ETFs fuss
For the past couple of months, all within the crypto sphere convinced themselves that the only way we can change the bear market trend is via institutional investments. Everyone was talking and hoping, that major countries will eventually accept the blockchain industry as a financial instrument. Everyone expects juridical regulations will eliminate the high volatility within the crypto markets while flooding it fresh institutional investments. In Europe and Asia, we’ve witnessed a couple of crypto security developments, while the countries officials expressed positive views about the blockchain market in general. Yet one of the major jurisdiction has been absent from this positivism – the US. The country’s Securities and Exchange Commission (SEC) has been continuously hesitant to support the crypto market or even show some positivism, despite the numerous investment firms that tried to get an approval for listing and trading cryptocurrency ETFs on major US exchanges.
What the heck are the ETFs?
In simple terms, Exchange-traded funds, or ETFs are securities that combine mutual funds with trading capabilities of stocks. An ETF fund owns a basket of assets (such as stocks, bonds, oil, gold etc.) and divides the ownership of those assets into shares. In crypto, a Bitcoin ETF will enable cautious investors to start investing without actually having to deal with crypto exchanges (which for some reason remain obscure for many people). There are two ways the US investment firms are trying to list digital assets’ ETFs on major stock exchanges. The first one is to actually purchase and store cryptocurrencies and than divide the shares of its ownership among the fund’s stakeholders. While the second one is to own cryptocurrency futures, this way was adopted by most of the applicants from this year.
Who are the players on ETFs applications
One of the earliest firm to work on crypto ETFs approval on US soil was the Tyler and Cameron Winklevoss’ proposed bitcoin price index. The famous Winklevoss twins tried to lay the legal grounds for an exchange-traded fund tied to bitcoin’s price in early 2014, but their actual application was filled in March 2017. The price of Bitcoin growth in anticipation of the news but eventually the ETF was rejected as the SEC believed the market is highly susceptible to fraudulent practices due to lack of regulations.
The next big news came from the Chicago Board Options Exchange, which is the largest options exchange in the US. After the introduction of the bitcoin futures in early 2018, 14 of the biggest players on the Chicago exchange filled ETF proposal to the SEC. Among them were the VanEck, ProShares, Direxion and First Trust – the 4 biggest players in the ETF industry. The following deadlines for approval of bitcoin ETF are crucial for the crypto market direction:
ICE and BAKKT
Probably one of the most important news for the year came a couple of weeks ago and remained unnoticed for most of the general public. The Intercontinental Exchange (ICE), the giant company that owns the NY Stock Exchange and other global marketplaces announced that it is forming a new company called BAKKT. The aim of the company is to transform the Bitcoin into a global trusted currency and broaden the Bitcoin usage. They will create an ecosystem which will enable consumers and institutions to buy, sell, store and spend digital assets. To accomplish its vision the project partnered with other giants from the worlds of technology, consulting and retail. Most famous names so far are Microsoft, Boston Consulting Group, and Starbucks.
The end-game for BAKKT will be to make Bitcoin a sound and secure investment while clearing the way for major money managers to offer Bitcoin mutual funds, pension funds, and ETFs.
What does all this mean?
To sum it up, despite the continuous downtrend of the overall crypto market, the optimism that countries will finally accept the digital currencies as securities and jump on the moon wagon has never been higher. The fact that major financial players are working on an official approval from the SEC means that we are not that far from the institutional flood of capital. If we see a digital currency ETF on one of the US stock exchanges, this will guarantee billions of new money coming in and reverse the market trend. On top of that, the BAKKT project despite still being in its infancy stage looks very promising. Moreover, for the past couple of months, we are witnessing whale wars specifically trying to push down the BTC price and the whole market with it. For me, this is a clear sign that the big players are trying to accumulate at the lowest price as possible, in anticipation of some big announcements and developments. For the ordinary investor, the only thing that’s left is to stick to our crypto and HODL till the end…