A well-known crypto-journalist Alex Lilasher in an article for Brave New Coin gives five reasons not to lose faith in bitcoin (or believe in it with renewed vigor).
The current bitcoin price level can be a great starting point for many investors.
2018 was a difficult year for bitcoin hodlers, who had to watch the fall of the number one digital currency by more than 50% since the beginning of the year. However, there are five reasons that will help not to lose faith in bitcoin.
- The institutional ecosystem for bitcoin is growing
Intercontinental Exchange (ICE) announcement of the launch of the digital asset exchange for institutional investors in November — the main news for holders of crypto assets this year.
Intercontinental Exchange (ICE) is the owner of the new York stock exchange (NYSE), and it intends to give investors the opportunity to trade futures on bitcoin.
While bitcoin can already be seen as a viable asset class, the launch of a new crypto asset by the wall street giant is exactly what is capable of meeting the needs of the institutional investment community.
And on this side of the Atlantic, Germany's second largest securities exchange, Börse Stuttgart, also announced plans to launch a cryptocurrency trading platform. As reported by FinExtra, she will specialize in ICO, trading and the safe storage of digital currencies.
While bitcoin is preparing to become a part of institutional portfolios, barriers on this way gradually come to naught. Before the launch of the ICE solution for large investors to store funds remain a few months, and it will be a long-awaited institutional "pump" for the market.
- Regulators have realized that bitcoin is here to stay
One of the biggest risks for bitcoin over the years has come from regulators, as they as well as governments could try to root out cryptocurrency as a way to carry out transactions bypassing financial institutions.
In early 2018, this risk played a role in lowering the price of bitcoin. In March, the G20 discussed global rules for digital currencies. Fortunately, the G20 participants came to the conclusion that cryptocurrencies do not threaten the financial system. Thus, the global counter cryptocurrency will not happen.
In addition, several countries and jurisdictions have demonstrated a positive attitude to crypto and a desire to develop the blockchain industry. Belarus, Bermuda, Gibraltar, Malta and Switzerland are seeking to become leading blockchain hubs, and Germany is going to officially legalize bitcoin as a means of payment.
- ETF is just around the corner
Although it is impossible with complete certainty that we will see the emergence of publicly traded bitcoin ETF, the majority of scientists believe that it is only a matter of time.
A stack of applications for new bitcoin ETFs is waiting for approval on the table of the securities and exchange Commission (SEC), and SEC Commissioner Esther pierce said she does not agree with the recent refusal of the Winklevoss brothers and that this refusal is bad for innovation.
Moreover, if there are already regulated bitcoin futures on Cboe and CME approved by CFTC, it is difficult to imagine a scenario in which bitcoin ETFs will never be approved by us regulators.
- Excellent asset for portfolio diversification
These studies, Yale University talking about the fact that every diversified investment portfolio should contain from 1 to 6% of bitcoins, depending on the beliefs of the investor.
The authors of the study found that bitcoin and cryptocurrencies are not affected by General stock market and macroeconomic factors, and that they are not correlated with other currencies or commodities. In their opinion, the rates of cryptocurrencies depend only on the factors of the crypto market.
In addition, the work says that bitcoin, ether and Ripple are characterized by a higher Sharpe ratio than stocks or bonds, and this means that in terms of the risk of non-return of funds, they have a higher yield.
- Growing demand in emerging markets
According to LocalBitcoins, despite the current "bearish" market, the volume of bitcoin sales in emerging markets has already begun to move to the highs of 2017.
For example, countries such as Kenya, Mexico, Nigeria and the Philippines have experienced significant increases in trade volumes over the past few months. Also, users from Argentina, Venezuela and Zimbabwe, where national currencies are rapidly depreciating, are now more inclined to recognize bitcoin, and trading volumes in these States have already reached new highs in 2018.
Even if the majority of buyers from developing countries are small retail investors who can not be compared with institutional ones, their activity perfectly shows the tendency to recognize bitcoin at the global level.