Make Bitcoin Great Again?
Over the past few years, the market has seen the rise and fall of the grandfather of all cryptocurrencies – Bitcoin. Now, in its slump, investors argue whether Bitcoin will see the same heights that it once did.
Although there are groups on both sides – with some claiming that Bitcoin’s day is over, while others argue a rise in price is imminent – the truth is far more complex. Bitcoin can rise again, but it requires a shift in the crypto industry to happen, says George Zarya, CEO of BEQUANT.
Fundamentally, the retail aspect of cryptocurrency investment has been a huge driver for the market. Small groups of consumers have willingly put money into a wide range of digital assets with Bitcoin being one of the first examples of this. While this has led to huge growth in the market, there now needs to be an equal amount of attention from large financial institutions in order to take the crypto market to the next stage.
This has already begun to occur, with research from the Global Blockchain Business Council (GBBC) showing that up to 41% of institutional investors believe they will be entering the Initial Coin Offering (ICO) sector within the next five years. Through this kind of support from large industry bodies, the cryptocurrency sector will gain further legitimacy – a factor that has historically plagued the asset since its inception.
However, even with the investment of large financial institutions, there still needs to be further reliability in order for coins like Bitcoin to regain their presence in the market. Fundamentally, the ‘new frontier’ that is crypto-investment has been viewed as a lawless and unregulated, leading many financial leaders to resist investment in the sector. Without more consistent regulation in place, the large institutions will always be nervous about entering the market.
While those in the industry have done much to offset these concerns – such as aligning themselves to wider market regulation or creating self-monitoring bodies – there needs to be increased support at a governmental level to legitimise the efforts of the crypto-market. The challenge here is that the controls that different jurisdictions put in place need to strike a balance between making crypto assets more secure while still encouraging sector growth in a burgeoning market.
However, if governments can find this middle ground, the result will be a far more reliable market for investors. Fortunately, there have already been some developments in this area, with increased infrastructure for institutions and more accessibility to crypto banking on the rise.
Without more consistent regulation in place, the large institutions will always be nervous about entering the market.
Avoiding bubbles, promoting reliability
Ultimately, institutional buy-in and increased regulation will set the right framework for a more reliable market. This will result in more stable assets to invest in, with assets such as Bitcoin able to stabilise and grow in line with the market changes. The cryptocurrency market will become less volatile, with investors making better decisions on the future of certain assets and recognising the ICOs that have the most potential.
In doing so, the ‘bubbles’ that have previously characterised the market will decline and there will be a clear distinction between the assets being invested in. Some coins will serve the same use as traditional fiat currency, while others – such as Bitcoin – will feature as more of an investment option for traders. Investors – both retail and institutional – will have a much clearer distinction of these assets and will be able to make informed decisions on which coins to purchase.
To date, Bitcoin’s story has been viewed as a reflection of the wider cryptocurrency market. However, the reality is far more complicated. Regulation and buy-in from leaders in financial services is integral for any market growth and will ultimately inform the future of this well known, if hotly debated, currency.