Bitcoins price may be evaporating, but Wall Street players are embracing it like never before. The owner of the New York Stock Exchange has begun Bitcoin futures trading, Fidelity is expanding its Bitcoin custody business, PricewaterhouseCoopers is auditing crypto funds, Davis Polk & Wardwell is giving them legal advice, and Marsh & McLennan is helping companies get insurance. All the boldfaced names are on board.
Those developments would seem to be bullish for the digital currency. And yet, Bitcoin has been languishing, and not just in terms of its price, which is down 16% over the past month, to $7,700. The digital currency simply isnt useful, and there is no clear path to it getting there.
There needs to be greater utility, said Adam White, the chief operating officer of Bakkt, the cryptocurrency custodian launched by NYSE-owner Intercontinental Exchange (ticker: ICE). White was speaking at a conference put on by a New York company called BlockWorks Group that aims to educate investors about cryptocurrencies.
Theres an argument that Bitcoin is a store of value, and acts like digital gold, and that is its use case, White said. That may be true. Its our thesis that the size of that pie will never be big enough to justify the aspirations and the opportunities that this technology brings.
A recent survey of crypto and blockchain CEOs and founders connected to venture-capital firm Digital Currency Group came to a similar conclusion about Bitcoins use cases. Of those leaders, 71% expect Bitcoin will mainly be used as a store of value over the next five years, and another 7.6% say it wont be useful for anything.
Bakkt is trying to push Bitcoin into the real world, working with Starbucks (SBUX) to let people pay with it at the register. But even that experiment shows Bitcoins limitations. When the service launches next year, Starbucks wont actually be accepting Bitcoinsoftware will turn it into cash before it hits the companys balance sheet.
Others have similar hopes for larger adoption. Konstantin Richter, CEO of blockchain company Blockdaemon, said at the BlockWorks conference that the biggest impact for all of us would be somebody like Square accepting Bitcoin for payments. That would probably double the price of everything. But Square (SQ) already tried to allow merchants to accept Bitcoin in 2014, before pulling the plug because of a lack of interest. Despite now allowing users of its Cash app to invest in Bitcoin, it hasnt brought Bitcoin back for merchants.
Wall Street has built a robust structure around cryptocurrency. The walls, electricity, and pipes are secure, but the building remains a shell where few want to live. In part, this is simply a matter of timing. The infrastructure had not been there in 2017, when Bitcoin was having its moment, doubling monthly and drawing millions of new retail investors. The washout that followed drove many of those investors out.
There may be no way to convince those investors to crawl back in given the rout they experienced in 2018, when Bitcoin lost 70% of its value. But some fund managers think there is another demographic that will soon get comfortable with crypto.
If you think about the wealth of this country, its in the hands of 50- to 80-year-olds, not 20- to 30-year-olds, said Mike Novogratz, CEO of Galaxy Digital Holdings, a crypto-focused merchant bank. We havent had this group participate in a big way yet.
A Galaxy affiliate introduced two new funds aimed at that crowd in November, with one demanding a minimum investment of $25,000. Fidelity, Bloomberg, Deloitte & Touche, Ernst & Young, and Davis Polk are all on board to track and provide custody for the products. For the first time we can actually create a fund that has institutional service providers, institutional feel, Novogratz said.
Still, one challenge to getting those 50-to-80-year-olds involved is that Bitcoin remains subject to remarkable volatility, with price moves that can be difficult to explain. Optimists say the idiosyncratic moves show that Bitcoin is uncorrelated to the rest of the market. But its one thing to invest in an uncorrelated asset, and quite another to invest in an irrational one.
Despite the pedigree of the firms now backing crypto, Bitcoins drastic price moves continue to rattle the market, including an 18% plunge in a matter of hours on Sept. 24. Explanations for the moves often seem pasted-on after the fact. People do try to reverse engineer it to link it back to an event thats perhaps caused it, says Simon Peters, an analyst with brokerage eToro. He adds that Bitcoins recent weakness has been caused by a lack of demand. Miners are looking to offload Bitcoin on exchanges, but they arent finding enough buyers, he says. Investors may be rattled by Chinas decision to ban many cryptocurrency exchanges.
Even with the recent drop, Bitcoin nears the end of 2019 in stronger shape, its price having doubled since January. In its 10th year of trading, the digital currency hit several significant milestones and drew in major new playersmost prominently, Facebook (FB) announced its Libra project to create a new digital currency that would make payments cheap and easy around the world.
Going forward, it will need a new narrative. Bitcoins most distinctive attribute is that it allows money to be transferred over the internet by people who wish to remain anonymous. Proponents call this censorship-resistance, but it also means that Bitcoin is used to fund things like child pornography rings, blackmail schemes against local governments, and subverting elections. Its no surprise that Bitcoin made several cameos in the Mueller report.
Bitcoin remains an elegant technology, with real potential. But to catch the eye of those 50-to-80-year-olds who havent yet invested, it will need a clearer purpose beyond just Wall Streets approval.
Write to Avi Salzman at firstname.lastname@example.org
- US Deficit Will Be at Least 6 Times Bitcoin Market Cap Every Year - Cointelegraph - January 24th, 2020
- Bitcoin Puzzle Worth 2.1 BTC STILL Unsolved, Find New Clues Here - Bitcoinist - January 24th, 2020
- Bitcoin Price Prediction: Bears in full control of the market, lack of healthy support may see price drop even more - Confluence Detector - FXStreet - January 24th, 2020
- Five Years of Bitcoin Trendlines All Lead to This One Point; Fireworks Inbound - newsBTC - January 24th, 2020
- Coronavirus: Will Gold and Bitcoin Prices Rise as 2nd City in China... - Coinspeaker - January 24th, 2020
- Bitcoin Price Breaks Below $8,300, Is The Bull Rally Already Over? - newsBTC - January 24th, 2020
- Top 3 Price Prediction Bitcoin, Ethereum, XRP: Bears take over and draw a bloody moon - FXStreet - January 24th, 2020
- Bitcoin 'to increase 98% in value by end of year' - Netimperative - January 24th, 2020
- Top 3 Price Prediction Bitcoin, Ethereum, XRP: Set for a dive before the next big bull market - FXStreet - January 24th, 2020
- Interim proprietary injunction granted over bitcoin cyber extortion payment - Data Protection Report - January 24th, 2020
- New Book on Craig Wright, Self-Proclaimed Inventor of Bitcoin (BTC), Gets Dropped by Publisher - The Daily Hodl - January 24th, 2020
- 5 Major Bitcoin Trends To Watch In 2020 - Forbes - January 23rd, 2020
- The Evolution of Bitcoin's Technology Stack - Cointelegraph - January 23rd, 2020
- Bitcoin Has Begun Its Journey to Fresh All-Time Highs; Factors to Consider - newsBTC - January 23rd, 2020
- Bitcoin Indicator that Crashed Price to $3.1K Returns: The Dreaded Death Cross - newsBTC - January 23rd, 2020
- Largest Bitcoin (BTC) Investment Vehicle Now Registered As an SEC Reporting Company: Grayscale - The Daily Hodl - January 23rd, 2020
- Bitcoin Price Will Reach $400,000 after Halving If History Is to Be Taken into... - Coinspeaker - January 23rd, 2020
- Regulation will see Bitcoin go mainstream in the UK Coinfloor CEO - Yahoo Finance - January 23rd, 2020
- Tesla Vs Bitcoin: Which One You Should Hold by 2025? - Bitcoinist - January 23rd, 2020
- Instantaneous Bitcoin [BTC] Payment Will Soon be Enabled at Starbucks, Courtesy of Bakkt - Coingape - January 23rd, 2020
- How Much Influence Will China Have On The Future Of Bitcoin? - Bitcoinist - January 23rd, 2020
- Alleged bitcoin thieves arrested by Tokyo police over 78 million haul - The Japan Times - January 23rd, 2020
- An Analysis of Price Discovery in Bitcoin Spot Markets - Traders Magazine - January 23rd, 2020
- Billionaire Investor Sees Major Flaw In Bitcoin Investment Thesis - Forbes - January 22nd, 2020
- Bitcoin Price Indicator Eyes First Bullish Turn Since August - Coindesk - January 22nd, 2020
- Swiss Banks Enter the Age of Bitcoin - CoinDesk - January 22nd, 2020
- Bitcoin technology: Whats coming in 2020? - Yahoo Finance - January 22nd, 2020
- Heres Why Wall Street Veteran Thinks Bitcoin Isnt a Viable Money, Yet - newsBTC - January 22nd, 2020
- Will The Bitcoin Price Get Demolished By Central Bank-Issued Cryptos? - Forbes - January 22nd, 2020
- Now Reporting to the SEC, Grayscale Bitcoin Trust One Step Closer to Public Trading - Cointelegraph - January 22nd, 2020
- The Key Indicator That Led Massive Bitcoin Upsurge to $13.8K Just Blinked Again - newsBTC - January 22nd, 2020
- These Two Crypto Exchanges Greatly Increased Their Bitcoin (BTC) Reserves in 2019 - U.Today - January 22nd, 2020
- Why Bitcoin Is Driving Altcoins To The Moon - Forbes - January 22nd, 2020
- Bitcoin, Crypto Assets are not Banned in India: RBI - Bitcoinist - January 22nd, 2020
- Bitcoin is up 20% so far this year and one expert predicts it could hit $16,000 by year end - CNBC - January 22nd, 2020
- Institutional Money May Be Igniting the Current Bitcoin Rally - CCN.com - January 22nd, 2020
- New Analysis Finds That Mondays Are the Best Days to Buy Bitcoin - Cointelegraph - January 22nd, 2020
- Bitcoin Solves This: Billionaires Own More Than 4.6 Billion People Combined - Bitcoinist - January 22nd, 2020
- Heres Why Joe Rogan Is Not Convinced on Cryptocurrency and Bitcoin (BTC) - The Daily Hodl - January 22nd, 2020
- Bitcoin: The Biggest Opportunity Of 2020 - Seeking Alpha - January 22nd, 2020
- Bitcoin SV (BSV) Is Up 40% but Analysts Arent Convinced Bulls Are Back - newsBTC - January 22nd, 2020
- Bitcoin, ETH, XRP, And LTC Rally Gains Momentum: How Long Will It Last? - Forbes - January 22nd, 2020
- Bitcoin Just Saw A Key Technical Breakout: Big Reaction From Bulls Imminent - newsBTC - January 22nd, 2020
- Bitcoin Is Plunging, But Its Too Early To Say Bulls Have Given Up - newsBTC - January 22nd, 2020
- Is This Why Bitcoin SV Climbed Another 20% In the Last 24 Hours? - newsBTC - January 22nd, 2020
- How Bitcoin's On-chain Activity and the Iran Crisis Correlate? - Bitcoinist - January 22nd, 2020
- Crypto market overview: Bitcoin (BTC) bulls lose initiative; altcoins drive the market higher - FXStreet - January 22nd, 2020
- Is Bitcoin the Answer to Trump's 'Generosity' Towards Banks? - Bitcoinist - January 22nd, 2020
- Report: Bitcoin outperforms banks in settlement times and reliability - Micky News - January 22nd, 2020
- Bitcoin Reaches Its Highest In More Than 2 Months - Forbes - January 14th, 2020
- Resurgent Bitcoin Will Likely Shrug Off Long-Term Bear Cross - Coindesk - January 14th, 2020
- Bitcoin's price rose 87% in 2019 here's what happened in Q4 - The Next Web - January 14th, 2020
- Is Bitcoin in 2020 Really Like the Early Internet? - CoinDesk - January 14th, 2020
- Bitcoin SV Has Suddenly Soared, Pushing Bitcoin To A Fresh 2020 HighHeres Why - Forbes - January 14th, 2020
- Bitcoin: The Next Level - Forbes - January 14th, 2020
- Cryptocurrency Market Update: Bitcoin and major altcoins start the trip to the moon - FXStreet - January 14th, 2020
- US Judge Appoints Receiver To Oversee Butte Bitcoin Plant - MTPR - January 14th, 2020
- Adam Back: $10 Million Bitcoin Prediction Is Closer Than It Sounds - CCN.com - January 14th, 2020
- Teslas Elon Musk Teases Bitcoin Community With Tongue-In-Cheek Tweet - Forbes - January 14th, 2020
- Whale Alert: $1 Billion (0.7% Of Total Bitcoins) Just Transferred For $80 Fees - CryptoPotato - January 14th, 2020
- Former Coinbase VP: we moved billions of dollars into Bitcoin in large part because of Plaid - CryptoSlate - January 14th, 2020
- These Factors Suggest Bitcoin Cashs Recent Rally is Just Getting Started - newsBTC - January 14th, 2020
- 2019 Bitcoin Transaction Volume Moved Away From US in First Since 2013 - Cointelegraph - January 14th, 2020
- Top 3 Price Prediction Bitcoin, Ripple, Ethereum: Higher levels to watch after the bullish run - FXStreet - January 14th, 2020
- Bitcoin Trading Volumes More than Doubled in a Week Says Report - Cointelegraph - January 14th, 2020
- Bitcoin Equivalent of $4.7 Trillion Added to US Debt is $260k per BTC - Bitcoinist - January 14th, 2020
- Is Bitcoin Is About To Repeat Its 2019 Rally? - Bitcoinist - January 14th, 2020
- 2010s In Bitcoin: The Year 2019 - Forbes - January 1st, 2020
- Officials with Butte Bitcoin company suing major investor - KPAX-TV - January 1st, 2020
- Ethereums Price Action is Similar to Bitcoins at $3,000: An Insane Rally is Imminent - newsBTC - January 1st, 2020
- Bitcoin Price Yearly Candle Shows Failed Rally, Longest Wick on Record - newsBTC - January 1st, 2020
- Etoro CEO Yoni Assia on Reaching 12 Million Users and Why Cryptos Are a Gateway to Stocks - Bitcoin News - January 1st, 2020
- 2010s In Bitcoin: The Year 2016 - Forbes - December 31st, 2019
- Bitcoin Price Poised to Jump 40% Towards $10,000; Heres Why - newsBTC - December 31st, 2019
- The 2010s In Bitcoin: The Year 2015 - Forbes - December 31st, 2019
- Bitcoin, despite its ups and downs, had a monster decade of growth - American Banker - December 31st, 2019
- 2010s In Bitcoin: The Year 2017 - Forbes - December 31st, 2019
- Bitcoin Price On Verge of Long-Term Doom; Heres Why - Ethereum World News - December 31st, 2019
- Whats in Store for Bitcoin as the Year Draws to a Close - Market Realist - December 31st, 2019
- Why Bitcoin Price Is Likely to Gain Momentum After New Years - Ethereum World News - December 31st, 2019