Compared to December 2017, things aren’t actually looking good for cryptocurrencies. Though Bitcoin was able to reach $20,000 right before 2017 closed its doors, it hasn’t performed quite well in the past months. In fact, Bitcoin is struggling to even maintain $8,000.
If Goldman Sach’s technical analysis is true, there is a chance that it could even sink lower than $6,000 sooner or later. However, Jon Matonis who is the co-founder of Bitcoin Foundation and executive at VISA mentioned that the entry of banks and financial institutions such as Goldman Sachs can actually resuscitate the already struggling Bitcoin price.
He mentioned that “I think it’s fabulous that they’re getting into it because it brings in new liquidity. They’re going to develop futures markets, options markets, I even think you’re going to start to see interest rate markets around bitcoin. We’re used to hearing things about Libor, the index for bitcoin interest rates is Bibor”.
When Exactly Will Banks Enter the Picture?
With its lack of liquidity, speculations, and regulatory changes shaping the industry, the crypto market is highly volatile. However, it is true that the trading volume of Bitcoin and other cryptocurrencies have declined since January after a correction in Bitcoin price.
And mainly because of its volatility, whales, as well as institutions, were able to manipulate the crypto market to the point where they were able to buy low.
Chicago Board Options Exchange has proposed recently to the US Securities and Exchange Commission (SEC) that Bitcoin exchange-traded funds (ETFs) on US stock markets such as NASDAQ and New York Stock Exchange (NYSE). And for this, it is possible that banks such as Goldman Sachs can enter the picture. And once this happens, it would mean that there will be more interested parties at play in the crypto market.
Though the need for institutional investors is quite high, their presence is virtually non-existent at this point. However, Japan is a different story. There are institutional investors that are investing in the cryptocurrency market via trading platforms that are used to address retail traders.
Bitcoin Isn’t a Bubble?
For Maltonis, he mentioned that Bitcoin isn’t a bubble. However, Bitcoin is the pin that would actually pop the entire global financial bubble. He further explained that the equity markets and bond markets are the multi-trillion dollar bubbles that would inevitably burst in the midterms.
He said that “To the people who say bitcoin’s a bubble, I would say bitcoin is the pin that’s going to pop the bubble. the bubble is the insane bond markets and the fake equity markets that are propped up by the central banks. Those are the bubbles”.
Uncertainty When Institutions Enter the Crypto Market
It is true that the entire cryptocurrency market over the last few months has been pictured as a gambling ecosystem considering the price swings. It is possible that the institutions will only get involved in the crypto market if they want to be at the forefront of crypto development. However, given the bear cycle that cryptos are experiencing, it is possible that big players are actually waiting for this moment.