Bitcoin Rally Here to Stay – Or Fleece?

In the midst of rallies that have identified asset classes of all kinds in 2020 – where things were humid to start the year, turned sour in the spring and then bounced (no, roaring) into the rare months, bitcoin stands out.

As of this writing, and as reported by CNBC, the name of a cryptocurrency tent stands out as it touches on fresh new highlights of about $ 23,000, echoing the highs seen as far back as three years ago, when it went bitcoin at $ 20,000.

The digital currency is up more than 200 percent a year so far, and while speculation is rife about how high the price can go, as MarketWatch reports, some Wall Street observers are seeing bitcoin trading as high as $ 250,000 or more.

The key question remains, though: What is different this time, if anything?

For one thing, institutional investors are increasingly coming to the game.

CNBC quoted Eric Demuth, CEO of the cryptocurrency trading app Bitpanda, as saying that “this run is completely different from the one in 2017.” He said “back then, the price was mostly driven by retail investors.”

But now, at least some asset managers have been embracing bitcoin as a hedge against currency and gold. Investing titans like Paul Tudor Jones has bought into bitcoin, holding a portion of assets under management with the crypto as a hedge against inflation, as Bloomberg reported earlier this year.

We may have been moving beyond the speculation that marked the “Wild West” atmosphere of crypto trading a few years ago, aiming towards using bitcoin as a tool for investment returns. But then comes the question of whether bitcoin can cross the Rubicon into full currency.

And there lay the rub, to grab a line from the Poet. Investors are watching other investors. They especially watch what the “smart” money – the big names – do, and so they buy what the stars buy.

Thus, price gains become a bit of a self-fulfilling prophecy. Keeping bitcoin on the books to enhance the value of the “asset” side of the balance sheet (in this case, a portfolio) can be a sound strategy.

Elsewhere, suspending a claim on bitcoin trading can pay dividends as well. Square, for example, said in its latest earnings report that revenues from bitcoin trading amounted to $ 1.6 billion, tied to activity facilitated through a trading feature in its Cash App. The company also bought $ 50 million of bitcoin to hold on its balance sheet.

But the use cases emerging through companies like PayPal may determine whether bitcoin’s surge will be long-lasting or short-lived. As reported in this space, PayPal said its 350 million users will soon be able to deposit bitcoin and other cryptocurrencies into their accounts and spend it on 26 million traders.

In an interview with Karen Webster, Daniel Gouldman, CEO of crypto-banking platform operator Ternio, said PayPal certification could help crypto go mainstream.

“Basically, PayPal has just said, ‘hey, we’re going to open this to everyone,'” said Gouldman. “Bitcoin is like a [crypto] Version 101. It’s made for Grandmother, so no one – my child, Grandma – can mess with PayPal. ”

Ternio, of course, has approached Visa as an enabling partner focused on cryptocurrency. PYMNTS reported in October that the partnership means that Ternio will help crypto companies and FinTechs come to market with crypto payments that will tour the Visa rails – and thus be accepted by any business or trader who receive a Visa.

Visa’s own crypto efforts are branching beyond just bitcoin, as an announcement comes in October of Coinbase opening a waiting list for U.S. consumers interested in applying for its new Coinbase Card. The Coinbase Card is a Visa debit card that allows users to use their bitcoin or other crypto holdings to shop online and in stores. Crypto can also be converted into cash at the ATM.

These are still early days, but notes that just over an estimated 18,600 traders worldwide are receiving bitcoin from this month. That expectation is what drives up the price.

And, of course, we’ll also eventually see digital dollars and other electronic versions of fiat crowd into space. So for now, it’s too soon to say whether 2020 is the year that bitcoin got its tail … or its climax.

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