According to Tom Jessup, head of the Fidelity Digital Assets platform, Bitcoin adoption has reached a «tipping point» thanks to «unprecedented monetary and fiscal stimulus» from governments.
Speaking at the Investing in Crypto virtual event, Jessop pointed to «many reasons» why digital asset adoption should be «accelerated» in various areas of life.
Among them are near-zero interest rates and a policy of «free» money – the efforts of the US Federal Reserve to rescue the economy in the face of the consequences of the COVID-19 pandemic.
What will happen to Bitcoin
The shock to the economy caused by the pandemic forced the Fed to launch a «printing press», that is, to increase the mass of the dollar in circulation. This factor was the reason for many investors to invest in Bitcoin in the past year. The rapid rise in the price of BTC has caused a chain effect – attracting more attention to the cryptocurrency from both ordinary and institutional investors. Thanks to all this, Bitcoin has finally reached the «point of no return», the expert says.
We are talking about the volume of investments, after which it is almost impossible to «remove» cryptocurrency from international finance. This means Bitcoin and other coins have become too big to disappear.
Growth in Bitcoin capitalization over the past 180 days
Note that this is not the first recognition by representatives of large organizations that Bitcoin will play an important role in the global economy. For example, last month, multinational investment bank Citibank released a report in which it identified crypto as a likely contributor to future global trade. Also earlier this year, BNY Mellon, the oldest bank in the United States, announced plans to store and manage digital assets on behalf of its clients.
However, experts agree that a number of challenges need to be overcome before Bitcoin can truly become widespread. The main ones are its volatility – that is, the variability of the exchange rate, reliability and regulation by states.
The last factor should not be a problem, says Hester Pierce, Commissioner of the US Securities and Exchange Commission. During the recent MarketWatch virtual conference, she stated that the US still lags behind the rest of the world when it comes to digital asset regulation. But Pearce also added that things will go in the right direction with the arrival of new crypto-savvy SEC chairman Gary Gensler. Here is her line, quoted by Decrypt.
I think that we very early passed the moment of the possibility of a ban on Bitcoin in the US, because now we would have to turn off the Internet. I don’t understand how cryptocurrencies can be banned. Of course, an effort could be made. However, it is already very difficult to prevent people from trading digital assets. So I think it would be foolish for the government to try to do something like that.
We agree with Pierce’s point of view. Indeed, cryptocurrencies have become all too popular in recent years. Therefore, there are enough people in the niche who are able to launch their own nodes to verify transactions and ensure the operability of the network, which guarantees the functionality of blockchains even if they are banned.
In addition, blockchain assets are gaining popularity among young people. According to investment bank Piper Sandler, 9 percent of American teens have tried cryptocurrency trading. The experts obtained this result after a survey of 7 thousand people.
In general, we can conclude that Bitcoin and the crypto market have become too «visible» in the international arena to ignore them. At the same time, cryptocurrencies have become quite widespread and, as noted by Pearce, now it is necessary to turn off the Internet in order to curb the development of the crypto market.
Naturally, no one will do this, and the only thing left for regulators is to ensure the development of the industry by adopting new legal norms.
We believe that the position of the representative of the US Securities and Exchange Commission really reflects the current situation in the world. Now – against the backdrop of investments in Bitcoin from Tesla and MicroStrategy – cryptocurrencies can be considered a full-fledged asset for investment. Therefore, further the niche will not be banned, but large-scale development and transition to the mainstream. However, this will still take many years.