Everyone knows the story. When the first block of Bitcoin (BTC) was mined, the protocol itself entered a world of grave economic uncertainty. Not long before the market would hit its lowest point of the 2009 recession, Bitcoin was quietly created, dropped like a life raft alongside a then-sinking economy. The now infamous phrase “Chancellor on brink of second bailout for banks” was cribbed from the headlines, immortalized in code in the origin story of one of the most compelling, innovative, best-performing assets of the last decade.
But Bitcoin did not immediately take root beyond a small community of true believers. Bitcoin and digital assets, in general, have been a lot of things in their relatively short histories, from purely speculative investments and “magical internet money” to a crisis-time safe haven and an attractive hedge against “the great monetary inflation.”
In the face of the COVID-19 pandemic, an associated market meltdown and huge amounts of central bank stimulus, cryptocurrencies have proved themselves to be remarkably resilient.
But as we watch vaccines being distributed around the country, cautiously optimistic that the end of the pandemic is within reach, where will crypto fit in a post-pandemic world? If its history of resilience shows us anything, we expect crypto to adapt to whatever the next few years will bring — crisis or not.
Just three years ago, leaders of some of the largest banks in the world refused to even talk about Bitcoin in interviews, calling the asset itself a “fraud” and referring to those who would buy it as “stupid.”
Today, the general sentiment across banks is markedly different. On the heels of the United States Office of the Comptroller of the Currency’s Interpretive Letter #1170, which made explicitly clear that federally chartered banks can provide banking services to legally operated companies in the digital asset space and custody digital assets on behalf of their clients, banks have been looking for the best way to get their clients the crypto exposure they demand. We anticipate legacy financial players’ interest in crypto to only grow in the coming years, with crypto becoming a mainstream requirement of financial services.
In the short term, banks will almost certainly rely on subcustody relationships with digital asset specialists to safely and effectively get crypto into their clients’ hands. And this is because the complexity is easier to address from the crypto-native side than the other way around.
We also anticipate some number of acquisitions to occur, with some crypto service providers being swallowed up by banks with pockets deep enough to buy them. As demand for crypto services grows, and as regulatory clarity comes, more and more institutions will enter.
Proliferation of decentralized apps
Just as Bitcoin was built in response to the failings of a legacy system, decentralized finance has emerged as crypto’s answer to financial intermediaries. Until recently, though, entire portions of this ecosystem have been unavailable to institutions, mostly for lack of a secure means to participate.
Slowly but surely, institutional-grade DeFi tools are coming to market, and we anticipate this trend to continue. Not only will we see a continued proliferation of DeFi growth, but institutional-grade tools will make institutional participation far more accessible.
Despite its significant growth, the DeFi space is still very much fragmented. Cross-chain interoperability — or lack thereof — is still a problem. Institutions want to be able to put their assets to use across the DeFi ecosystem. We anticipate significant growth in this area, with more and more layer-one protocols being bridged to DeFi and the broader Ethereum ecosystem — a development that also has the potential to improve liquidity along with market stability and efficiency.
Corporate treasuries and lowered barriers to entry
Against a backdrop of seemingly endless monetary stimulus, a significant number of private companies are treating digital assets as an inflation hedge. Some of these, like Square and MicroStrategy, have taken significant positions in recent months. We’ve seen MassMutual buy up $100 million in Bitcoin. And with Tesla’s $1.5-billion dollar Bitcoin purchase this month, the trend shows no signs of slowing. In the coming years, we expect digital assets to become an instrumental part of private-company balance sheets.
Another factor at play is the lowered barrier to entry on the retail front. With tools like Celo’s Valora coming to market, Diem expected to launch in 2021 and firms like PayPal making it easy for their clients to buy crypto, we expect to see more of crypto as a tool for banking the unbanked — for putting financial tools into the hands of the millions without access to traditional banking services.
Beyond the crisis narrative
By virtue of being built in response to one economic crisis, crypto seems to be locked into a crisis narrative. In reality, digital assets have more than proved to be resilient in even the most challenging economic times. Just this past year, crypto proved itself in the grips of a once-in-a-century global emergency, earning a place in the portfolios of institutional and retail investors alike.
As the pandemic (hopefully) fades into the rearview, it’s exciting to think about what crypto can do without being forced into a defensive posture — without being defined against legacy assets like gold. It would be naive to say that crypto will never face another crisis — it almost certainly will. But from here, at what feels like the tail end of the pandemic, it’s exciting to think about what crypto can do in whatever “new normal” comes next.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Diogo Monica is a co-founder and the president of Anchorage. Before co-founding Anchorage, Diogo was the security lead at Docker — an open platform for building, shipping and running distributed applications. He has a B.Sc., an M.Sc. and a Ph.D. in computer science, has published several papers in peer-reviewed security conferences on the topic of distributed systems and information security, and is the author of several patents in secure communications, encrypted hardware and payment systems.
Bitcoin At $100,000: Estimating The Chance Of Six Figure BTC In 2021
Bitcoin price (BTC) reached a new all-time high this week, soaring to almost $65,000 on Wednesday the 14th of April. With Bitcoin’s price now in “blue sky territory” and its market cap sitting comfortably around the $1.17 trillion level, the big question is – just how high will the current bull market push the BTC price this year?
Rounding Up The Most Famous Bitcoin Price Predictions
Here are some of the most famous individuals and institutions in crypto that have gone on record with bullish Bitcoin price calls:
In March, analysts at major US investment bank, JPMorgan, were reported to be eyeing a Bitcoin price of $130,000 – although no timeframe was provided for their prediction. JPM’s CEO, Jamie Dimon, was vocal in his criticism of Bitcoin in the past. However, the firm’s increasing involvement in crypto projects reflects the growing integration of cryptocurrency within the traditional financial sector.
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MicroStrategy’s CEO, Michael Saylor, is renowned for converting his firm’s cash reserves to Bitcoin and encouraging other corporate leaders to follow suit. At last count, MicroStrategy held over 90,000 BTC, worth approximately $5.5 billion at the time of writing. Unsurprisingly, Saylor is extremely bullish on the BTC price, saying in a March interview that he “can see Bitcoin going to a million… [or] five million.”
Pantera Capital, launched in mid-2013 as the original American crypto investment fund, has projected a Bitcoin price of $115,000 before September of 2021. Pantera’s call is based on the Stock to Flow (S2F) model of Bitcoin’s price, which has thus far shown a high degree of predictive power. Given the time-specificity of Pantera’s call as well as their transparency regarding its rational basis, we would consider this the most considered prediction.
Daily Bitcoin chart showing the bull run since late 2020 until present | Source: BTCUSD on TradingView.com
A Rally-Supportive Economic Environment
Predictions alone, no matter who makes them, aren’t enough to elevate Bitcoin to a six-digit price level. What’s needed are enthusiastic buyers and hodlers, whether they be individual investors or large institutions.
As to the latter, we’ve already alluded to MicroStrategy’s crypto corporate coffers. Perhaps following Saylor’s advice as presented to thousands of corporate representative, Time Magazine recently announced their own acquisition of Bitcoin.
Furthermore, with financial titans like BlackRock and MasterCard recently announcing their involvement in Bitcoin, there can be no doubt of the institutional appetite for » Read more
” href=”https://www.newsbtc.com/dictionary/satoshi/” data-wpel-link=”internal”>Satoshi’s invention.
The stock-to-flow model projects much higher prices for BTC | Source: Digitalik.net
Perhaps the most compelling reason driving investors, big and small alike, into Bitcoin is the expectation – and indeed the observation – of high inflation. With central banks around the world printing billions if not trillions of fresh fiat units as a response to COVID 19, the scene has been set for declining fiat value and rising costs for goods and services.
Related Reading | Coinbase COIN Debuts To A Bloody Bitcoin, But Bullish Structure Remains
With high inflation everywhere except government statistics – steel prices up 3x on the year, for example – it’s no wonder that demand for hard, deflationary money has never been higher.
Featured image from Deposit Photos, Charts from TradingView.com
Coinbase’s $86bn Valuation Has Been Grossly Exaggerated by Misleading Media
Coinbase shares closed at $327 on their Nasdaq debut, giving the crypto exchange an initial market cap of $86bn on a fully diluted basis.
Fully diluted refers to the total number of common shares outstanding and available to trade on the open market after all possible sources of conversion. But some feel this measure gives an inaccurate valuation as it includes options and restricted stock, therefore overstating the number of shares used in the valuation.
In the buildup to the IPO, some analysts expected Coinbase to achieve a $100bn valuation. While its closing valuation wasn’t a million miles away, it was still less than expected.
Coinbase Listing is a Watershed Moment For The Cryptocurrency Industry
Coinbase is the first major crypto company to test the U.S. public market. Its IPO was hailed as a turning point in cryptocurrency going mainstream. Analyst Dan Ives wrote:
“Coinbase is a foundational piece of the crypto ecosystem and is a barometer for the growing mainstream adoption of bitcoin and crypto for the coming years in our opinion.”
” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>COIN opened at $381 on the Nasdaq Global Select Market. Early on, buyers pushed the price as high as $429, but bears soon took over to dip the price as the day wore on. It ended the session at $327.
Source: COINUSD on TradingView.com
The firm had released some impressive figures before its public debut. It showed a spike in revenue and a doubling of its monthly active users from the previous quarter.
But market research firm New Constructs had already sounded the alarm on a severe overvaluation at $100bn. They believe a valuation this high takes no account of a future squeeze on its transaction margins.
the company has little-to-no-chance of meeting the future profit expectations that are baked into its ridiculously high expected valuation of $100 billion.”
The Actual Valuation Should be $65mn
While Coinbase’s fully diluted valuation came in at $86bn, pretty much in the middle of pre-debut expectations of between $60bn – $100bn, CIO at Arca Jeff Dorman said this figure is grossly overstated.
Dorman slammed the media for “misinformation” and “horrible reporting,” saying they were using the wrong share count. Based on 198mn class A and B shares, Coinbase’s closing valuation should be $64.7mn.
“That math is wrong — There are 198mm class A and class B shares o/s, not 261mm. If we use fully diluted share count, then every stock on the planet has infinite shares due to no restrictions on how much stock a company can issue.“
On the matter of ever reaching a $100bn valuation, researcher Larry Cermak expects this to happen as long as the bull market continues.
“Direct listings almost always trade down in the next few days because of the high float that’s being dumped. As long as the bull market continues, it will eventually recover and go $100B+ IMO. Low volume today is somewhat surprising though.”
At this point, it’s unclear whether an overstated Coinbase market cap is a help or hindrance to crypto. While an overstated valuation is likely to drum up interest, the spin side sees additional pressure on Coinbase to live up to the hype.
ETH bonanza as three North American Ethereum ETFs approved in one day
While gaining exposure might still be difficult south of the US-Canada border, Canadian investors will shortly have a host of options to choose from to gain exposure to Ethereum (ETH) via an ETF as regulators have approved three different Ethereum ETFs in a single day.
Purpose Investments, Evolve ETFs, and CI Global Asset Management were all approved by Canadian regulators to launch Ethereum-backed ETFs today. The ETFs will be the first ETH ETFs in North America, and among the first in the world.
Some observers noted that all three being approved at once may have been part an effort not to give Purpose an “unfair advantage”. Purpose appeared to gain an edge after the launch of the wildly popular Purpose Investments ETF, the first North American Bitcoin ETF which quickly swelled to $1.3 billion in AUM while competitors waited for approval. Rival Evolve Fund Group’s Bitcoin ETF only managed to attract $100 million in AUM, despite launching only two days later than Purpose and offering 25% less management fees.
In a Tweet, a reporter for Bloomberg said that the CL Galaxy and the Purpose ETF funds will begin trading on 4/20 — a date he thought would please Elon Musk, given it’s marajuana culture connection. Likewise, Evolve’s ETH ETF — which they first filed for in March — will begin trading on the same day.
Updating yet again… @CIGlobalAsset & @GalaxyDigital just got approval for their #Ethereum ETF alongside @PurposeInvest‘s. I THINK both will begin trading on … wait for it … 4/20 — Amazing @elonmusk https://t.co/SNFY4jNpUa pic.twitter.com/4ZUSCJEVQ5
— James Seyffart (@JSeyff) April 16, 2021
The Canadian stock market has already demonstrated a significant appetite for exposure to crypto assets. Previous exchange-traded Ethereum products led to market halts on the first day of listing, and Purpose’s Bitcoin ETF cracked $100 million in its first day of trading.
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