Opinions

Why 2019 Will be the Year of Bitcoin & Crypto Institutional Investment?

Last year in December 2017, when bitcoin was at its peak and almost reached $20,000, everybody was very excited about the leading digital currency growing, but for past six months, the cryptocurrency crash has brought out the skeptics. In fact, the ongoing “Crypto Winter” is a healthy cleansing of the ecosystem because the correction is effectively separating long-term value creators from short-term day traders. Those who are looking for the fast profit with low investment are the short term day-traders, and on the other hand, people with reasonable investment and patience are the value creators. When the “Crypto Winter” will be over and “Crypto Spring” will arrive, cryptocurrency will lead the markets in the form of Institutional Capital.

According to the experts, there are some reasons for investors to trade in cryptocurrency during 2018 and in 2019, before it replaces fiat currency and become the main mode of payment throughout the globe. Some of these reasons are:

U.S. regulators recently have been constructive about crypto

Investors and economists in U.S., and across the world, have realized that cryptocurrency is the future and it will be widely accepted in the market. Bitcoin as the major currency can replace the fiat currency and become the main mode of payment. After these observations, Government authorities and regulators have been very constructive about crypto. Many Governments have officially announced and endorse cryptocurrency and have made changes in their legislation when needed, to best suit the customer. Many Governments have been charging tax on cryptocurrency and services provided against crypto. Governments are very optimistic about the adoption of crypto in the market. With all this adaptive behavior there are three issues that need to be considered:

  1. Identify the people who have been defrauding investors with fake initial coin offerings (ICOs).
  2. Defining the differences between utility tokens and security tokens.
  3. Working with crypto businesses to create appropriate regulations to protect investors without hurting innovation.

Overall, the industry and regulators are heading in the right direction, though it could take a few more years before they develop common standards. Tighter regulation will help to tackle many of the crypto scams which have stopped investment desirability previously, as all new coins and investment opportunities will have to stick to the certain criteria.

Institutional quality blockchain solutions

The underlying technology of blockchain is not only the backbone of the cryptocurrency world, it is doing so much more behind the scenes than any of us really give it credit for. Blockchain technology is changing the world at a rapid pace. With its arrival in 2008 after the advent of Satoshi Nakamoto’s whitepaper, the technology has been met with immense demand both for development and commercialization. Over the coming ten years, industries across banking, agriculture, supply chain management and data, will leverage the blockchain to improve efficiency.

Blockchain technology is advancing at an exponential pace. Tens of thousands of the world’s smartest minds are using the technology to decentralise industries from banking to agriculture

The growing influence of the blockchain and its technology is transforming the way people are doing business. Blockchain and its technology solutions are achieving things that only the most enthusiastic nerds could have imagined.

Cryptocurrencies provide a unique and attractive combination of returns and volatility

Cryptocurrency is now the industry that grows tremendously daily and no one is willing to be indifferent. It’s no longer just a digital currency. It’s a huge investment opportunity that attracts the attention of the Government’s, large organizations and giant business ventures like Walmart. As with any investment, you need to keep focused on the long-term viability. If you become obsessed with short-term micro-analysis, every variation in price will have you worrying that you’ve made the wrong investment decision. This could cause you to panic sell at a lower price than you bought it for, when in reality, holding until the price recovered, and then went even higher, would have been the more sensible move.

The cryptomarket is volatile and price fluctuations WILL happen, with some more concerning than others.

Cryptocurrency futures, derivatives, and forward contracts are gaining adoption

After the Governments and regulatory authorities around the globe have accepted cryptocurrency, investors are approaching Bitcoin as a more viable investment opportunity, increasing the digital currency’s visibility and credibility at the mainstream level, and winning over the trust of many people who thought that crypto is just a bubble. Furthermore, regulated exchanges like LedgerX, Binance, and Coinbase are reducing risk, boosting liquidity, and drawing more institutional investors to the cryptocurrency market.

With derivatives, investors do not need to hold the underlying crypto asset, but they can still enjoy the potential benefits while possibly minimizing loses, much like they hedge regular currencies.

Regulatory approval for a crypto ETF is most likely imminent

There is an obvious need for a sector or a market-based exchange-traded fund to help investors diversify risk. Several crypto companies, such as Gemini and Bitwise, have filed for crypto ETFs, but so far, regulators have not approved any. However, the U.S. Securities and Exchange Commission might be shifting its position. The agency is now more concerned about curbing fraud on platforms that propose ETFs rather than the ETFs themselves. We believe the SEC could soon approve a crypto ETF.

By investing in these cryptocurrencies, you are helping the vision of these cryptocurrency creators become reality. Without investors, this innovation that makes the world a better place will cease to exist.

Large financial institutions are moving ahead with crypto products

Crypto assets have drawn the attention of institutional investors. Large institutions, such as Goldman Sachs, Fidelity, and Blackrock, have started to develop cryptocurrency products and the underlying Blockchain technology. To wit, Goldman Sachs is close to launching a Bitcoin trading desk. Fidelity debuted a crypto fund a year ago and is actively building teams for crypto custody and other related services. Blackrock, the world’s largest investment management firm, recently announced plans to invest in the Bitcoin futures market. We expect to see more institutions enter this industry and offer a variety of crypto-based derivative products.

By cutting red tape and eliminating onerous reporting requirements, it will allow cryptocurrencies to further benefit customers and help create good jobs

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Muhmmad Furqan

Furqan is a financial markets expert. A regular trader of cryptocurrencies and hold some investments in Bitcoin, Stellar, IOTA and OST. Contributes with latest industry insights. Email: furqan@blockpublisher.com or contact the editor at editor.opinions@blockpublisher.com

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