The crypto-winter continues to prolong as we come towards the end of the first quarter of 2019. Bitcoin (BTC) is primarily trading in the $3000-$4000 range since November 2018. The main roadblock towards cryptocurrency and Bitcoin adoption has been regulatory and Government Approval.
Nevertheless, according to Garrick Hileman, head of research at Blockchain and research associate at the London School of Economics there essentially has been only a regulatory delay but with positive developments. Hileman said,
“When regulation tightens, we’ve seen the bitcoin price respond positively more often than not. It’s helped legitimize bitcoin … regulator have, by and large, not sought to ban bitcoin and other cryptocurrencies. In the early years of bitcoin there was a fear that bitcoin would simply be outlawed.”
He also hinted towards the auction conducted by the US and Australian Government of the seized cryptocurrencies by the authorities.
“Law enforcement typically doesn’t auction off seized cocaine,” Hileman added. “There’s a growing acknowledgment that bitcoin’s going to be here.”
On Bitcoin’s Utility
Although there hasn’t been direct regulatory disapproval towards Bitcoin and cryptocurrencies, the questions surrounding Bitcoin’s utility as an asset class looms at large. Hileman continued to reaffirm the fact that Bitcoin’s primary use is as a store of value compatible with Gold.
“The main use for bitcoin today is as digital gold,” Garrick Hileman told AltFi’s Crypto For Earthlings podcast. “The question is though, who will be buying digital gold? If central banks start to accumulate bitcoin, that could be hugely impactful on bitcoin’s price.”
Central banks, which set interest rates for the countries and regulates the inflation also have the responsibility of monitoring the Federal Reserves. They include a variety of assets in reserve to reduce risks; these include Foreign Currencies, Bonds and Swaps. Therefore, going by the rate of improvement in Bitcoin, the Federal Authorities might choose to accumulate Bitcoin as well.
The FinTech leaders and proponents of Bitcoin and cryptocurrency like John McAfee and Novogratz too have asserted their belief in Bitcoin. According to them, the next Bitcoin bull cycle will go higher than before.
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