Bitcoin has ridden a wave of momentum in recent months, with the digital asset climbing to over $52,000 per coin over the last few days according to coinmarketcap.com. This rise is incredible to see given that Bitcoin was valued at around $11,000 in September 2020 and was less than $1,000 in early 2017.
The digital investment scene was sent into a frenzy in recent weeks as Tesla, the electric car company run by Elon Musk, invested $1.5billion into Bitcoin, further cementing its legitimacy.
Nick went on to explore the impact of this: “[The] $1.5billion investment by Elon Musk’s Tesla sent the world’s most valuable and best known cryptocurrency to new highs with institutional and everyday investors wanting a piece of the action.
“Mainstream circles are talking about a realistic scenario in which BTC hits $100k this year.
“What has made cryptocurrencies so attractive in choppy economic waters, however, is that they are a liberated way to hold and trade money free from the onerous baggage of fiscal policy or government banksheets that don’t always put the consumer first.”
It should be remembered that Bitcoin is still a very volatile asset to own and it’s value has dropped as dramatically as it has risen in the past.
As with any other investment, a position in Bitcon should be considered very carefully and on this, there may be some evidence that regulatory actions could bring some form of stability to crypto assets in the future.
Nick concluded: “While cryptocurrencies have seen plenty boom and bust since they first appeared a decade ago, the difference now is that they are showing signs of going truly mainstream.
“In June of last year, the Financial Conduct Authority reported the number of UK consumers who have invested in cryptocurrencies at some point jumped by 74 percent year on year to reach 2.6million, 90 percent of whom held £4,300 or less and were taking their first steps in a new approach to their finances.”Earlier this month, the FCA also began regulation of crypto derivatives, marking a UK regulatory agency’s first significant intervention to protect everyday consumers.
“There is absolutely more regulation that needs to take place to protect consumers from the risk associated with Bitcoin, and other cryptocurrencies, and we applaud regulators for heeding the call.”
While Nick was welcoming of more regulatory action, others warned more scrutiny could harm Bitcoin’s potential.
Nigel Green, CEO and founder of deVere Group, warned that as Bitcoin gains more mainstream attention, regulators could become more scrutinous.
As he explained: “Bitcoin and other cryptocurrencies will come under the spotlight from watchdogs like never before and this can be expected to create volatility in the market.”
Nigel commented on the recent Tesla news, noting that while this brought excitement, it also led to Janet Yellon, the United States Secretary of the Treasury, to raise the prospect of expanding regulation and on top of this, the Securities and Exchange Commission (SEC) could reportedly investigate Elon Musk over the investment.
Nigel concluded with the following warning: “Institutional investors are increasingly appreciating that in this tech-driven, ultra low interest rate, low growth world, and where there is diminishing trust in traditional currencies, digital and borderless cryptocurrencies may be becoming a better fit.
“We can expect the price of Bitcoin to surge to fresh highs as a result. But investors must be aware that regulatory pressures will cause price turbulence.”
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