A good business plan is to buy cheap and sell at a higher price. In the cryptocurrency market, this strategy also applies. So, when we see more institutional companies buying into the digital currency phenomenon, it isn’t surprising to see crypto become a bargain before the initiation of mainstream sale.
While this allows new customers to buy Bitcoin and altcoins at a price not seen in more than a year — Bitcoin is currently at $3,979, a low that hasn’t been seen since September 2017 — coin holders, exchanges, and miners have lost millions. The market has been bullied by both internal and external forces that leave the future of cryptocurrency up for grabs.
Institutions Jumping on the Crypto Bandwagon
KPMG, a large financial adversary company, conducted a lengthy report on the need for institutions to enter the cryptocurrency market in order for digital currency to thrive. They address the core problems of scalability, uniformity, and practicality when it comes to many altcoins. Institutions like banks, payment gateways, and fintech companies bring to the forefront solutions to regulatory compliances and taxation. And while this provides more safety to its users, there is a fine line to protect the original decentralization of cryptocurrency.
We now see the implementation of institutionalization in the cryptocurrency market with large companies like Goldman Sachs creating their own crypto products and resources. Other financial institutions like ICE (Intercontinental Exchange) owned by the New York Stock Exchange will be launching Bitcoin-backed contacts in mid-December this year just in time for a predicted bull-run.
Manipulation and Disagreements
Bloomberg released a report early this month covering the U.S. Justice Department investigation in the market manipulation of the stable coin tether and the cryptocurrency exchange Bitfinex. This led to the inflated price of Bitcoin and other digital currency last winter. More recently and unintentionally is the hash wars continuing between the split of Bitcoin Cash into two new forks, leaving investors and exchanges confused. Both occurrences have put a dent in the reliability of the cryptocurrency market.
Coincidentally, just as crypto seems to be busting, institutions seem to be ready to pick up the pieces and for a bargain. One has to wonder if this is all a coincidence at all.
A Chance for Mainstream Crypto
While this seems like the dark ages of cryptocurrency, a renaissance is about to occur where digital currency could be a household name. Although the market is unstable right now, the infiltration of institutions into the world of crypto could be just what it needs to boom. Spreading the distribution of large currencies like Bitcoin will remove the manipulation of whales who hold the majority of coins. It also may eventually lead to an ETF approval by the Security Exchange Commission (SEC), which would regulate the market even further.
It will be interesting to see how much authenticity remains in cryptocurrency as it becomes more and more a corporate and government entity.