The popularity of bitcoin reaches a climax and cryptocurrency seems to reach record highs every two days. As more and more people discover the wonders of cryptocurrency and try to increase their exposure, the center of the asset category continues to accumulate. Bitcoin currently has support at the level of $ 4,000 and this week reached a summary price of $ 4,500 for a slight decline.
Part of the fire that feeds bitcoin is institutional. Governments, investment banks and hedge funds all want a currency, and the Japanese financial information provider Fisco is the newest to go along with plans to create a Bitcoin-backed bond.
Fisco issued the first three-year loan to another company in its group earlier this month. Priced at 200 BTC (~ $ 840,000 at current prices), this simple fundraising exercise is the logical next step for a country where cryptocurrency already enjoys broad support.
While cryptocurrency is moving to the world of traditional finance, how is it going to behave? (See also: Bitcoin to form a third currency, when does it end?)
Earlier efforts to bring Bitcoin in the fold
The ETF Winklevoss Bitcoin was one of the first attempts to introduce bitcoin to the general public. Under the leadership of celebrity twins Winklevoss on Facebook, the idea was that regular Americans invest in bitcoin through their IRA or 401 (k) accounts, for example.
The SEC rejected the idea and stated that “it did not find the proposal consistent with Article 6 (b) (5) of the Exchange Act, which requires, among other things, that the rules of a national stock exchange are designed to prevent fraudulent and manipulative acts and practices. to prevent … “In other words, the bitcoin was defective.
Since then, progress has been made in creating derivative assets expressed in bitcoins. Many stock exchanges, such as BitMex, allow futures trading with 100x leverage. The release of BLX, a cryptocurrency index product from Iumeri, is also great news within the crypto-community. The Iconomi platform allows users to invest in their favorite crypto-currencies and to create Digital Asset Arrays that facilitate trading in a mix of currencies and combine the properties of currencies. The company introduced its first parts offer in 2016 and recently launched its first product, a coin that is the “fourth generation” after Bitcoin, altcoins and application tokens. It reflects the value of a mix of different cryptocurrencies and is now available at trade fairs.
Other ETFs have also emerged and the SEC has even agreed to review the Winklevoss product. As blockchain technology grows older, the suite of successes and acceptance in countries like Japan ensures that other governments reconsider their positions.
Governments have always been very suspicious of bitcoin and other crypto-currencies, which said little and did less. Although some portfolios are insured by the American FDIC, this hardly protects an investor or bitcoin-speculator in practice. After the rejection of the ETF, the bitcoin price fell by about 20%, but recovered quickly. (See also: SEC refuses Winklevoss offer to launch Bitcoin ETFs in Surprise Upset)
Because governments have not taken over bitcoin significantly, hedge funds and other market makers have become accustomed to buying through traditional exchanges. This has led to a dramatic price increase, even though the “investment” itself can not be regulated. As more and more investors deposit their money into cryptocurrency, governments can feel more pressure to act, and the position they take will have a huge impact on prices.
“The man” is coming, and he wants your Bitcoin
Why is bitcoin difficult to regulate? First, we must literally set a new encryption status. The SHA-256 standards that protect the Bitcoin blockchain are currently almost unbreakable. This simplifies transactions in the vicinity of anonymity and tax evasion. By keeping their bitcoin in exchange, even the most massive profits are made untouchable for entities such as the IRS.
If governments manage to integrate Bitcoin into their national financial infrastructure and impose standards for transparency, this will certainly have a significant impact on prices. Given the ability to invest in derivatives, indices and other bitcoin-based instruments, the money from the market bitcoin itself can leak and move elsewhere. Broad availability and increased liquidity can force people to compare bitcoin with other liquid assets: a comparison that Bitcoin currently regards as the loser.
The anti-establishment trends of Bitcoin have made it attractive to many and so far the market is largely the same as the Wild West. These conditions were positive for the prices, which is logical because Bitcoin is conceived as a decentralized currency. As bitcoin centralizes and legitimizes with the help of governments, the corruption of its most important principle could completely crush the cryptocurrency or eventually hit the ‘moon’ of it.