A few years ago, Bitcoin was an afterthought (or a non-thought) to most on Wall Street. It was so poorly understood that plenty of traders couldn’t even tell you the difference between Bitcoin and blockchain, the digital ledger technology serving as the heartbeat of cryptocurrencies.
Most analysts were bearish, deriding crypto in saying there was no future in digital currencies. Wrong.
Alas, May 2017 arrived and the Bitcoin beast awakened, starting a run from around $1,000 that peaked near $19,000 in December that year. A collapse subsequently happened, which saw Bitcoin testing $3,200 again in December 2018.
The Bitcoin bears got to stand on the mountaintop and shout how they were right; that Bitcoin is a worthless asset. Wrong again.
After a horrible 2018, the price of Bitcoin is back on the climb in 2019. Yesterday, Bitcoin neared $8,800, a move of about 175% from the December low.
What is happening is akin to the cannabis green rush. Remember less than a decade ago when nearly all so-called pot stocks were pink sheet-listed and dubbed scams by blue chip investors? Still, retail traders poured into the industry, creating massive volatility as buying and selling ebbed and flowed in tumultuous fashion on industry-related news.
Over time, the volatility as become more subdued. International beverage behemoths have jumped into the cannabis industry. There is a growing number of companies that trade on national exchanges like the NYSE, Nasdaq and TSX. What’s next? It is only a matter of time before a major player like Canopy Growth (NYSE: CGC) or Tilray (NASDAQ: TLRY) joins the S&P 500.
What is going on with Bitcoin, crypto in general and blockchain is normal for an emerging, misunderstood market. Make no mistake about, though, this is big business, as evidenced by Bitcoin sitting with a market capitalization near $160 billion on Thursday, which just adds to big swings and volatility.
Once people understand all the uses for the decentralized ledger of blockchain and the fact that many digital tokens are technology plays – not just a digital currency in the simplest sense – this industry is going to calm down and trade at a lower beta. Points in case, take a look at Ethereum or an upstart like SonoCoin. They’re not looking to disrupt online banking or PayPal (NASDAQ: PYPL) like Bitcoin is, they’re technologies that can change and improve upon data storage, data transfer and all the associated fields, such as marketing.
Mainstream Wall Street analysts are notoriously slow to move into new industries. Those groups want to see an industry mature and become more stable, “de-risked” if you will, before giving any credence to it. We’re experiencing a seminal period with digital currencies and it’s just a matter of time before majors start to crop up with Wall Street support, just like happened in the marijuana space. Mark my words.
At noon Eastern Time on Friday, Bitcoin is trading at $8,424. That’s down some on the day, but up 15% from $7,322 a week earlier.
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