Bitcoin has evolved in the last ten years. Originally designed as a reaction to the 2008 crisis, Bitcoin has changed the way we understand finance. It has removed third parties and is often debated by regulators. But after just a decade, thousands of other altcoins have already appeared. A lot of these altcoins are in it to exploit investors’ FOMO.
2018 is a story of regulatory changes. The crypto market has been struggling for the last 11 months or so but one of the things that makes observers and crypto investors optimistic about the entire situation is the fact that it can legitimize the market and get institutional investors involved.
Morgan Stanley by the end of October released their latest report on Bitcoin. The multinational investment bank and financial services company released the report that was entitled “Update: Bitcoin, Cryptocurrencies and Blockchain”. According to this report, Bitcoin and altcoins have been constituted a “new institutional investment class” since 2017.
This is good news if you are holding on to your Bitcoin because the report is quite optimistic about Bitcoin’s future. In fact, it has a bullish outlook for Bitcoin this year. The report tackled different things including how Bitcoin evolved as a mode of investment and even touched how regulators reacted to Bitcoin in the last six months. There were also discussions regarding stablecoin trend.
However, the report also discussed the shortcomings of Bitcoin. One of the things that was tackled was the energy consumption of Bitcoin mining. According to previous studies, energy consumption in Bitcoin mining is enough to power an entire country.
But one aspect that was discussed in the report was the “surprising” change in the source of funding going into the sector. It also discussed how the crypto-tied futures are developing.
Morgan Stanley considered Bitcoin futures a surprise mainly because banks don’t have plans on trading cryptocurrencies directly. However, they provided futures contracts. CEO James Gorman mentioned earlier this year that derivatives tied to cryptocurrencies could be offered to clients. Futures are basically contracts wherein the buyer agrees to purchase an asset at a price and time in the future.
One of the things that made the Morgan Stanley report interesting is the fact that it presented the “rapidly morphing thesis” on cryptocurrencies. It traces the evolution of Bitcoin in its role from digital cash to a new fundraising mechanism. And now, it has been called as a “new institutional investment class”.
Does it mean that there will soon be institutional investors into the picture? Bakkt, as well as Fidelity having a crypto company, is good news for the industry. In fact, these are signs that the crypto market is slowly maturing. And potentially, there will be more institutional investors that are going to be involved in the crypto market. You also have the anticipation on the possible Bitcoin ETF. Though the US Securities and Exchange Commission decided to delay the decision again, the SolidX and VanEck Bitcoin ETF application has a strong chance of getting approved.
Based on the report, it pointed out that crypto players are now cooperating with institutions such as Gemini Trust working with Nasdaq to conduct a market surveillance regarding the possibility of price manipulation. Could Bitcoin be adopted in 2019 by more retailers and institutional investors?
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