Bitcoin’s long-term case is being impacted from all sides right now.
with bitcoin trading more than 65% below its peak, the debate sparked by the previous down cycle will remain on whether it can be a reliable long-term store of value. Of course, the price of one bitcoin is still over $20,000—and traditional reserves such as gold have their ups and downs. But for now the value proposition still lies in a series of speculative bets: that bitcoin will prove itself as a store of value through future cycles; that it is a risk asset that can deliver competitive returns compared to assets such as stocks; Or that it will prove to be really useful in significant and sustainable ways.
However, it is about this cycle that the world of bitcoin and crypto has evolved significantly since the last one, yet a crash is occurring. And this fall probably comes in the midst of the biggest US regulator push Since the inception of crypto. Part of becoming a store of value is being held too wide in the diversity of owners, and thus becoming less vulnerable to shocks. But the path to bitcoin there still goes through Washington.
For example, extensive ownership by individual investors can be ensured most often through tax-protected accounts and retirement vehicle, While it is possible to own bitcoin in a retirement account, some big voices – including Treasury Secretary Janet Yellen – have urged to exercise caution Against bitcoin as a retirement option for average investors. Ms Yellen said it would be appropriate for the law to address this.
Another major vehicle for long-term retail ownership would be low-cost exchange-traded funds. Although US regulators have approved ETFs that employ bitcoin futures, a spot-market bitcoin ETF has not been approved. The Securities and Exchange Commission has said it will decide on the move of listed companies by July 6.
GBTC -1.63%
who owns bitcoin convert to etf,
For utility, bitcoin would have to compete with stablecoins – tokens designed to value a currency such as the US dollar – such as the USD coin as a digital medium for payment or value exchange. Although stablecoins face their own big questions, a future regulatory structure could provide some status to some fully backed stablecoins. The bank—or even the Federal Reserve—could begin issuing and transferring “Digital Dollar” Regularly.
Advocates of bitcoin say it could also be useful as collateral and money in other crypto ecosystems. But when volatility erupts elsewhere in the crypto world, bitcoin gets bogged down in the maelstrom. According to data provider CoinGlass, more than $400 million worth of bitcoins pledged by traders as collateral have been destroyed from approximately Monday morning until Tuesday morning. Bitcoin fell 15% on Monday after crypto lending platform Celsius Network Ban on evacuation on Sunday, Earlier This Year, The Price Of Bitcoin Plunged As Traders Scramble to deal with the fall The stablecoin of TerraUSD.
Following these episodes, further regulation of cryptocurrencies, and crypto finance in particular, seems inevitable. This effectively makes anyone bet on bitcoin right now betting on what the regulatory regime of the future will look like for crypto. This is not only true for bitcoin, which may have a relatively settled position. as an object, but how it can be owned and traded, and who can offer crypto financial services under what conditions. Before betting on anything in the crypto ecosystem now, investors should first ask themselves what aspects of crypto could be legal in five years.
That’s too much political risk for a hard reward.
While the SEC has not announced major action against major crypto exchanges, the commission has threatened to prosecute crypto lending companies. Dion Rabouin of the WSJ explains why this one segment of the crypto market has reacted so strongly. Photo: Mark Lenihan / The Associated Press
write to tellis demos telis.demos@wsj.com
Copyright © 2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8