Mikhail Mashchenko, an analyst of the social network for eToro investors in Russia and the CIS, shared his opinion with DeCenter on factors that indicate a favorable moment for investing in the first cryptocurrency.
Digital assets have noticeably livened up after yesterday's news that the BlackRock organization, which manages assets of $6.3 trillion, had created a working group to look into cryptocurrencies and blockchain (which was later rejected by the company's CEO). It would be interesting, however, to observe how the position of the management of the financial giant would change from "None of our clients want to invest money in cryptos . . . " and "There are no conditions for the work of institutionalists in the market . . . " to the desire to join the sharks such as JPMorgan and Fidelity.
In addition, last week, billionaire investor Steven Cohen announced investments in Autonomous Partners, a new crypto hedge fund created in December 2017, which already managed to attract large sums of money from Brian Armstrong (CEO of Coinbase), Union Square Ventures, and Craft Ventures. The company decided to invest not only in financial block startups but also in highly-capitalized currencies, such as Bitcoin and Ether.
While there is no need to speak about the general interest of institutional players, we can nevertheless note positive changes in the situation. If you are sure that this trend will continue, then it is better to think about opening positions now, rather than when the cryptocurrencies begin to blast off to new historical highs. Here are a few more reasons:
Cheapness. The cost of Bitcoin has fallen by almost 70 percent since the end of last year, and, as we know, it is worth investing in the moments of correction, rather than at record prices. The last time the investment guru Warren Buffett made really big money was during the 2008 crisis when he bought up sharply-depreciated stocks of those companies that were most likely to be supported by the state. On the cryptocurrency market, there are assets where money will be pumped in the first place after a change of negative sentiment, for example, Bitcoin. Do not forget about the limited supply, which is a strong growth factor in the future.
Increase in the number of blockchain wallets. Of course, compared with the end of last year, growth has slowed, but, in fact, it continues and looks much more organic.
Crypto funds and ETF. During the period of euphoria, a huge number of management companies were created, and although they are practically inactive now, as soon as the next bull run starts, the market will again have all the necessary and ready infrastructure for thriving. In addition, we still have not seen the ETF on the cryptos, the decision on which will be decided by the SEC on August 10. Exchange-traded funds in the commodity market have notoriously revived the rates of assets. As an example, we can speak of gold, which is an asset with much greater capitalization than Bitcoin. Since the appearance of the GLD exchange-traded fund in 2003, prices have become much clearer in following the inflation of the dollar than before.
The Lightning network. Only the laziest have not spoken about the technological backwardness of Bitcoin compared to new currencies and some banking products. The Lightning network, a protocol not devoid of shortcomings at the moment and working through a large number of errors, is meant to resuscitate the main cryptocurrency. When it is properly configured, Bitcoin can again become a convenient and efficient means of payment for regular needs, and it is logical to add Bitcoin to your portfolio before this implementation occurs.