The bitcoin price recently climbed over the $8,000 mark for the first time since May 2018, according to CoinMarketCap. Many investors are now wondering if the tide has officially turned and the bull market is here to stay. Billionaire investor Marc Lasry told CNBC that the price of bitcoin could reach up to $40,000 as it becomes more accepted and easier to trade.
I believe that as regulatory uncertainty in the space continues to be resolved, mainstream adoption continues to increase, and the CBOE application for a bitcoin Exchange Traded Fund (ETF) is passed — which it very likely soon will be, in my opinion — that the price may well surpass $40,000 by the end of 2018 and could continue to climb as we enter 2019.
Make no mistake about it: as the co-founder of a bitcoin IRA company who has held bitcoin investments previously, I’ve noticed that 2018 has marked a year of major growing pains for the crypto sector. But with growing pains also comes great growth. As Lasry has purportedly said, I believe we will see bitcoin prices continue to climb. Let’s look at four reasons why.
1. Bitcoin ETFs will expand the pool of cryptocurrency investors.
In June 2018, as previously mentioned, the Chicago Board Options Exchange (CBOE) was reported by NASDAQ to have filed an application with the Securities and Exchange Commission (SEC) to open the world’s first bitcoin ETF. If the application is accepted, then I believe bitcoin will become far more accessible to a wider range of investors who wish to invest in a crypto fund rather than directly into crypto itself.
I am optimistic that the application will be accepted. SEC Director of Corporate Finance William Hinman already stated earlier this year that bitcoin and ether did not necessarily qualify as securities and, therefore, I believe it’s likely they won’t be subjected to the same stringent regulations as other securities. Furthermore, the SEC also recently proposed easing its rules for low-risk ETFs, ultimately enabling an ETF to enter the market through a quicker and easier process.
Launching a bitcoin ETF (which seems to have been received with overwhelmingly positive feedback) would, to me, be a crucial advancement in the cryptocurrency sector, as it will make digital currencies more accessible to a wide range of people who might currently deem them too volatile or high-risk. As it stands now, investors holding bitcoin need a wallet to trade and store their digital currency. In a recent article, I explained the many nuances to look out for when choosing a cryptocurrency wallet. For a newcomer entering the space, this can be daunting. ETFs will likely appeal to a wider group of investors in that they are traded frequently and, in my experience, highly accessible via investors’ brokerage accounts. Furthermore, many potential investors also have concerns surrounding insurance plans and crypto custodianship or lack thereof.
However, CBOE’s application addresses many of these concerns. For example, the proposal states that the funds will be stored in a cold storage solution, meaning they would be kept offline and therefore inaccessible to potential hackers.
Additionally, an SEC report states that the CBOE’s proposal includes an insurance policy for instances when theft or cyber attacks occur, which I believe will give customers peace of mind that their funds will be covered in the event that any wrongdoing takes place — a common concern about cryptocurrencies which may have kept many potential investors away. With these provisions in place, I believe prices will only continue to climb and cryptocurrency will become an even larger component of daily conversation.
2. Mastercard’s new patent represents a trend in consumer thinking.
According to CNBC, Mastercard got a new patent in July 2018 for a strategy it says will improve the speed of cryptocurrency-related transactions. Many sources put the current processing time for a blockchain-based transaction at around 10 minutes; however, the new Mastercard strategy could speed up this process with accounts that can make cryptocurrency transactions directly. Mastercard plans to reduce these transaction times by offering a new type of user account that transacts in cryptocurrencies. If the patented offering is brought to market, it could eliminate the middleman by allowing customers to instantly pay for items on their credit card using digital currency.
Current trends suggest that there is consumer interest in blockchain technology, and I believe patents like Mastercard’s are an important response to meet that shift in consumers’ priorities. The patent, along with organizations working to offer faster blockchain-based transactions, reveal the ongoing commitment in the crypto community to make bitcoin transactions faster, more scalable and more streamlined than ever before.
This is crucial, because I suspect that many people, while fascinated by the concept of Bitcoin, remain unconvinced of the currency’s practicality. Should these efforts go to market, I predict cryptocurrency will become a much more ingrained part of our daily lives, as it will be a viable option at many of the places where we conduct our day-to-day transactions.
As bitcoin further cultivates a reputation as a trusted form of currency and subsequently gains greater visibility, I predict that bitcoin and other crypto prices will continue to rise in response.
3. There has been a massive increase in institutional adoption.
Just as 2018 has been a year of increased discussion of regulations in the crypto space, it has also been a year of increased institutional adoption. Thus far, I believe it has been a remarkable year in which the world of Wall Street and the world of crypto have already begun to intertwine. In May 2018, for example, The New York Times reported (paywall) that Goldman Sachs planned to launch a bitcoin trading operation.
The environment does seem to me to be heading in a pro-crypto direction. With time, I predict we will only continue to see increased institutional adoption in the crypto space, and prices will continue to climb. Additionally, I believe that as more financial institutions build out crypto products and with the likely passage of bitcoin ETFs, more investors at both the individual and institutional level will get involved with bitcoin, which will reflect positively in the price.
4. Momentum is building.
Bitcoin’s price has rallied in July. But momentum appears to be building on the blockchain side as well. Data reveals that the number of transactions per day surpassed at least 230,000 on-chain transactions per day, the highest since the beginning of the year. I believe that this trend of more on-chain transactions is indicative of increased demand in the crypto space as a whole, which will only continue to increase as decentralized technology evolves and digital currencies grow increasingly accessible — and useful — to a group of people that once deemed them radical.
The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.