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
- Is This The Real Reason Behind Bitcoins Huge Weekend Flash Crash? - Forbes - August 4th, 2020
- First Mover: As Fed Nears Inflation Rubicon, Analysts See $50K Bitcoin in Play - CoinDesk - CoinDesk - August 4th, 2020
- TUM team finds Bitcoin accounts for 2/3 of total energy consumption of cryptocurrencies - Green Car Congress - August 4th, 2020
- Bitcoin's flash crash and recent rally explained - BNN - August 4th, 2020
- Over 90% of ETH's Supply Now in Profit | Markets and Prices Bitcoin News - Bitcoin News - August 4th, 2020
- Chinese Bitcoin Miners Face Tougher Than Ever Rainy Season in 2020 - CoinDesk - CoinDesk - August 4th, 2020
- Bitcoin Trading Is Booming in Uncertain Russia, With 350% Spike in New Users on Paxful | Exchanges - Bitcoin News - August 4th, 2020
- 17-year-old accused of masterminding Twitter bitcoin scam - CNBC - August 4th, 2020
- Bitcoin Scaling Tech Could Have Saved Companies and Users $500M in Fees: Report - CoinDesk - CoinDesk - August 4th, 2020
- Government-Owned Swiss Bank Launching Crypto Trading and Custody Services | News - Bitcoin News - August 4th, 2020
- Bitcoin and Biotech on My Mind as Defiant Bears Get Crushed - RealMoney - August 4th, 2020
- Bitcoin will drop to $10K before rally resumes - Asia Times - August 4th, 2020
- Bitcoin Proof of Stake BitcoinPoS BPS - News Anyway - August 4th, 2020
- Ethereum Is Beating Bitcoin In More Ways Than One - Forbes - July 14th, 2020
- A Panel of Experts See Bitcoin Averaging $12948 by Year End - Bitcoin News - July 14th, 2020
- 'Ferocious Rally': Weiss Ratings Bullish on Bitcoin, Price to Hit $70K Next Year | Markets and Prices - Bitcoin News - July 14th, 2020
- Bitcoin Thieves Hit Cashaa - Infosecurity Magazine - July 14th, 2020
- $424 Million and Numismatic Value: There's Only 20000 Casascius Physical Bitcoins Left Unspent | Featured Bitcoin News - Bitcoin News - July 14th, 2020
- This Exchange Crashed Bitcoin Price to $9K: Heres Why Thats Bullish - Cointelegraph - July 14th, 2020
- US Army Requests Information on Tools to Track Cryptocurrency Transactions | News - Bitcoin News - July 14th, 2020
- 'Fiat and Money Printing' Street Mural Earns $500 in Bitcoin Donations in Five Days | News - Bitcoin News - July 14th, 2020
- Bitcoin Trading Volume Slumps; Will TikTok Revive Dogecoin? - Forbes - July 14th, 2020
- Comparing Apple to Bitcoin? Crypto Occupies a Class of Its Own - Cointelegraph - July 14th, 2020
- Huobi Futures to launch bitcoin options trading in Q3 - HedgeWeek - July 14th, 2020
- Bitcoin Transactions: New High for Argentina as Confidence in the Peso Tanks - Bitcoin News - July 14th, 2020
- CoinSwap and the Ongoing Effort to Make Bitcoin Privacy 'Invisible' - CoinDesk - CoinDesk - July 14th, 2020
- Black wealth must exit to Bitcoin, says author Isaiah Jackson - Decrypt - July 14th, 2020
- Bitcoin Price Retreat As Bulls Run Out Of Steam At The 50-Day SMA - InvestingCube - July 14th, 2020
- US Dept of Homeland Security Buys Analytics Software From Coinbase | News - Bitcoin News - July 14th, 2020
- Bug in Bitcoin Wallets Found Using the Replace-By-Fee Feature - PRNewswire - July 14th, 2020
- Nearly $60M in Bitcoin Moved to Ethereum in June - Yahoo Finance - July 9th, 2020
- ModiHost's Token Is Live on HitBTC, the Leading European Bitcoin Exchange | Press release - Bitcoin News - July 9th, 2020
- For The First Time It's Free To Hold Bitcoin In A Retirement Account - Introducing The No Annual Fee Choice IRA For Digital And Traditional Assets -... - July 9th, 2020
- Permissionless Software Foundation Aims to Foster Open-Source Software With Bitcoin Cash - Bitcoin News - July 9th, 2020
- Bitcoin Will Never Be Truly Private Says Andreas Antonopoulos - Cointelegraph - July 8th, 2020
- Forget Bitcoin and Cash ISAs! I'd buy cheap FTSE 100 shares now to beat the State Pension - Yahoo Finance UK - July 8th, 2020
- Ethereum, Bitcoin locked in DeFi hits all-time high of $2 billion - Decrypt - July 8th, 2020
- Nearly $60M in Bitcoin Moved to Ethereum in June - CoinDesk - CoinDesk - July 7th, 2020
- The Three Most Controversial Bitcoin Price Models and What They Predict - Cointelegraph - July 7th, 2020
- Trumps Former Sanctions Chief Joins Bitcoin Investigation Firm Advisory Board As Part Of Expanded $49 Million Investment - Forbes - July 7th, 2020
- Bitcoin Undo Button & Fleeing Firms: Bad Crypto News of the Week - Cointelegraph - July 7th, 2020
- Bitcoin Up 27% in First Half of 2020, Beating Gold, Silver and Platinum - CoinDesk - CoinDesk - July 7th, 2020
- The Popular Stablecoin Tether Is Now Circulating on the Bitcoin Cash Network - Bitcoin News - July 7th, 2020
- Demand for Bitcoin Will See a Dramatic Shift in 8 Years - Retail Investors to Eat up Entire New Supply | Economics - Bitcoin News - July 7th, 2020
- Breadwallet and Ledger Live Released Fixes for Flaws in Bitcoin Wallets - ResearchAndMarkets.com - Business Wire - July 7th, 2020
- Developer Reveals Layer-Two Private Messaging and Payment System on Bitcoin Cash | Technology - Bitcoin News - July 7th, 2020
- Equities Buoy Bitcoin, But Price Headwinds Are Unchanged - Forbes - July 7th, 2020
- Alleged scammers hid $14 million of stolen money in Bitcoin - Decrypt - July 7th, 2020
- Bitcoin As A Payment System Crypto Cards And The Rocky Road They Travel - Forbes - July 7th, 2020
- Bitcoin will hit $50,000 by the end of the year Nexo co-founder - Crypto News Flash - July 7th, 2020
- Crypto Derivatives Volumes Crash 36% to $393 Billion in June, a Low for 2020 | Markets and Prices - Bitcoin News - July 7th, 2020
- 20K Bitcoin Is Still On The Table - Futures Magazine - July 7th, 2020
- First Mover: The Return of the Bitcoin Retail Investor (And Why Thats a Good Thing) - CoinDesk - CoinDesk - June 30th, 2020
- The most secretive Bitcoin wallet just moved nearly $1 billion - Decrypt - June 30th, 2020
- Why the Stock-to-Flow Bitcoin Valuation Model Is Wrong - CoinDesk - CoinDesk - June 30th, 2020
- Why Bitcoin Will Take a Long Time to Dethrone the Dollar - CoinDesk - CoinDesk - June 30th, 2020
- Skeptics Concerned Plustoken Scammers Plan to Dump $187M Worth of Ethereum | Altcoins - Bitcoin News - June 30th, 2020
- Bitcoin.org Maintainer Calls for the Removal of Cobra, Website Owner Then Fires Him - Bitcoin News - June 30th, 2020
- An Israeli Blockchain Startup Claims Theyve Invented an Undo Button for Bitcoin Transactions - Cointelegraph - June 30th, 2020
- Bitcoin and Cardanos ADA Weekly Technical Analysis June 29th, 2020 - Yahoo Finance - June 30th, 2020
- Theory of Bitcoin: Essential knowledge from Craig Wright and Ryan X. Charles - CoinGeek - June 30th, 2020
- Bolstering Separation of Money and State Following the 244th Independence Day - Bitcoin News - June 30th, 2020
- Legendary Investor Jim Rogers Warns Governments Will Have To Eliminate Bitcoin - Forbes - June 27th, 2020
- What Changed My Mind About Bitcoin Narratives - CoinDesk - CoinDesk - June 27th, 2020
- The Last Time Volatility Was This Low Bitcoin Went On to Rally By $2K - CoinDesk - CoinDesk - June 27th, 2020
- Record Unemployment Has Contributed To A Striking Shift Toward Bitcoin, New Research Reveals - Forbes - June 27th, 2020
- Developer Who Successfully Hacked Bitcoin Wallet Ensures BTC Is Still Safe - Cointelegraph - June 27th, 2020
- What will happen to Bitcoin after all 21 million are mined? - Decrypt - June 27th, 2020
- Leveraged Tokens Soon Available on the Bitcoin.com Exchange | Promoted - Bitcoin News - June 27th, 2020
- Bitcoin mining farm buys up 17,600 minersdespite the halving - Decrypt - June 27th, 2020
- 6 Privacy-Enhancing Tools That Place Bitcoin Cash Transactions Ahead of the Pack | Privacy - Bitcoin News - June 27th, 2020
- Bitcoin Mining Chip Manufacturer Ebang to List on Nasdaq This Week - Bitcoin News - June 27th, 2020
- Bitcoin Suddenly Plunged To $8,900And It May Kickstart A 3-Month Correction - Forbes - June 16th, 2020
- Inactive Bitcoin Supply Reaches 4-Year High, Pointing to Bullish Sentiment - CoinDesk - CoinDesk - June 16th, 2020
- Crypto 101: How to Send and Receive Bitcoin Cash Via the Bitcoin.com Wallet | Featured - Bitcoin News - June 16th, 2020
- 6 Reasons Why 2020 Is a Great Year for Bitcoin - CoinDesk - CoinDesk - June 16th, 2020
- Currency wars: The rise of bitcoin - Opinion - Jakarta Post - June 16th, 2020
- Encrypted Messaging Site Privnote Cloned to Steal Bitcoin - CoinDesk - CoinDesk - June 16th, 2020
- Bitcoin is becoming more trustworthy than big banks, says survey - Decrypt - June 16th, 2020
- Bitcoin-Friendly Top US Banking Regulator Aims to Solve Banks' Problems With Decentralization | News - Bitcoin News - June 14th, 2020