Has Bitcoin Gone Mainstream

Has Bitcoin Gone Mainstream? Four Signs Prices Could Continue To Climb

The bitcoin price recently climbed over the $8,000 mark for the first time since May 2018, according to CoinMarketCap. Many investors are now wondering if the tide has officially turned and the bull market is here to stay. Billionaire investor Marc Lasry told CNBC that the price of bitcoin could reach up to $40,000 as it becomes more accepted and easier to trade.

I believe that as regulatory uncertainty in the space continues to be resolved, mainstream adoption continues to increase, and the CBOE application for a bitcoin Exchange Traded Fund (ETF) is passed — which it very likely soon will be, in my opinion — that the price may well surpass $40,000 by the end of 2018 and could continue to climb as we enter 2019.

Make no mistake about it: as the co-founder of a bitcoin IRA company who has held bitcoin investments previously, I've noticed that 2018 has marked a year of major growing pains for the crypto sector. But with growing pains also comes great growth. As Lasry has purportedly said, I believe we will see bitcoin prices continue to climb. Let’s look at four reasons why.

1. Bitcoin ETFs will expand the pool of cryptocurrency investors.

In June 2018, as previously mentioned, the Chicago Board Options Exchange (CBOE) was reported by NASDAQ to have filed an application with the Securities and Exchange Commission (SEC) to open the world’s first bitcoin ETF. If the application is accepted, then I believe bitcoin will become far more accessible to a wider range of investors who wish to invest in a crypto fund rather than directly into crypto itself.

I am optimistic that the application will be accepted. SEC Director of Corporate Finance William Hinman already stated earlier this year that bitcoin and ether did not necessarily qualify as securities and, therefore, I believe it's likely they won't be subjected to the same stringent regulations as other securities. Furthermore, the SEC also recently proposed easing its rules for low-risk ETFs, ultimately enabling an ETF to enter the market through a quicker and easier process.

Launching a bitcoin ETF (which seems to have been received with overwhelmingly positive feedback) would, to me, be a crucial advancement in the cryptocurrency sector, as it will make digital currencies more accessible to a wide range of people who might currently deem them too volatile or high-risk. As it stands now, investors holding bitcoin need a wallet to trade and store their digital currency. In a recent article, I explained the many nuances to look out for when choosing a cryptocurrency wallet. For a newcomer entering the space, this can be daunting. ETFs will likely appeal to a wider group of investors in that they are traded frequently and, in my experience, highly accessible via investors’ brokerage accounts. Furthermore, many potential investors also have concerns surrounding insurance plans and crypto custodianship or lack thereof.

However, CBOE’s application addresses many of these concerns. For example, the proposal states that the funds will be stored in a cold storage solution, meaning they would be kept offline and therefore inaccessible to potential hackers.

Additionally, an SEC report states that the CBOE's proposal includes an insurance policy for instances when theft or cyber attacks occur, which I believe will give customers peace of mind that their funds will be covered in the event that any wrongdoing takes place — a common concern about cryptocurrencies which may have kept many potential investors away. With these provisions in place, I believe prices will only continue to climb and cryptocurrency will become an even larger component of daily conversation.

2. Mastercard’s new patent represents a trend in consumer thinking.

According to CNBC, Mastercard got a new patent in July 2018 for a strategy it says will improve the speed of cryptocurrency-related transactions. Many sources put the current processing time for a blockchain-based transaction at around 10 minutes; however, the new Mastercard strategy could speed up this process with accounts that can make cryptocurrency transactions directly. Mastercard plans to reduce these transaction times by offering a new type of user account that transacts in cryptocurrencies. If the patented offering is brought to market, it could eliminate the middleman by allowing customers to instantly pay for items on their credit card using digital currency.

Current trends suggest that there is consumer interest in blockchain technology, and I believe patents like Mastercard's are an important response to meet that shift in consumers’ priorities. The patent, along with organizations working to offer faster blockchain-based transactions, reveal the ongoing commitment in the crypto community to make bitcoin transactions faster, more scalable and more streamlined than ever before.

Study: Bitcoin

Study: Bitcoin Investors and Speculators Maintained Their Positions Over Summer

Bitcoin (BTC) investors and speculators held their positions over the summer, while markets seem to have become more stable overall, according to a new study by Chainalysis published September 24.

The data presented in the report was compiled using the concept of standardized monetary aggregates. Specifically, the analysts categorized coins from the most liquid (coins used for speculation and transactions) to less liquid (coins held for investment), and the least liquid (lost coins, or coins yet to be mined), subsequently categorizing the money supply into monetary aggregates.

Per the study, the monetary aggregates were “extremely steady” during the summer, showing that the amount of BTC held for speculation was stable from May to August at around 22 percent of available BTC. The amount of BTC held for investment also showed stability during the same period at around 30 percent.

Chainalysis suggests that this is a sign the market has become less susceptible to hype, having built a tolerance to news flow, which according to the report, is no longer able to push BTC prices up and down. “Instead, the market seems to have recalibrated after the entry of so many new market participants with different beliefs and expectations than those who held Bitcoin prior to 2017,” the study further reads.

Both long-term investors and speculators maintained their positions over the summer, reportedly meaning that only a fundamental change like restrictive regulation or technology improvements could cause a market reaction.

In June, Chainalysis published a study, which shows a switch from BTC “hodlers” to speculators in the six preceding months. Since December 2017, the amount of BTC held by day traders has reportedly risen to 5.1 million BTC, almost equaling the amount held by long-term investors — those who have held the coins for more than a year — which equals about 6 million BTC.

This Bitcoin Price Prediction

This Bitcoin Price Prediction Chart Shows Parabolic Gains

Anyone who follows Bitcoin knows how it has a history of dramatic price swings.

But that history, when translated to a logarithmic Bitcoin price prediction chart, shows that over the long term, the price of Bitcoin has followed a distinct pattern as it has moved higher.

And that suggests several more steep jumps lie ahead for the preeminent cryptocurrency that will push BTC not only past its all-time high of just under $20,000, but far beyond it, past $50,000 in the near term and ultimately to $250,000 or even $1 million.

Prateek Goorha, an interdisciplinary social scientist with an interest in the economics of innovation and creativity, has written two blog posts analyzing the phenomenon, which he calls the "parabolic supertrend" in Bitcoin.

Prateek Goorha, an interdisciplinary social scientist with an interest in the economics of innovation and creativity, has written two blog posts analyzing the phenomenon, which he calls the "parabolic supertrend" in Bitcoin.

The basic idea is that each major Bitcoin price jump has come as the result of three distinct phases….

What Bacteria Can Teach Us about Bitcoin Price Moves

It turns out that Bitcoin's price behaves a lot like bacteria.

Each major price move has included a phase of stasis, an exponential phase of rapid growth, and a phase of decline. These cycles have driven the price of one bitcoin from mere pennies in 2010 to thousands of dollars.

This Is Creating Billionaires: This technology is projected to grow 63,000% and create $7 trillion in new wealth. Will you be able to capitalize on these windfall profits?

In that context, the recent 70% decline isn't as ominous as it might seem. This chart, first created by an internet crypto technical analyst who goes by "Parabolic Trav," does a good job of showing how Bitcoin's periodic sharp declines haven't broken the overall pattern of parabolically higher prices.

Take a look:

HODL No More? The Amount of Bitcoin in Active Wallets Is Near Record Highs

HODL No More? The Amount of Bitcoin in Active Wallets Is Near Record Highs

An increasing amount of bitcoin is being held by active individual users, rather than companies and long-term investors, according to new data from Chainalysis.

Announced Monday, the analytics firm found 4.8 million bitcoin, or roughly 32 percent of the protocol's cryptocurrency supply (minus lost coins), was held in personal wallets with some level of transactional activity as of August 31. That's up substantially from the end of 2017 – around the time the market peaked – when just 3.8 million bitcoin, or 26 percent, was in the hands of individuals.

The August numbers were the second-highest for individual accounts on record, and off only slightly from July's high of 4.95 million bitcoin, or 33 percent of all coins in circulation.

"There are more people who are holding crypto personally," Chainalysis economist Philip Gradwell told CoinDesk.

As a result, Gradwell said, "there's a much larger supply that's liquid. A lot of the people who bought [this year] are buying smaller amounts," adding:

"They are ready – if things were to change, [if] the opportunity to spend it were to arise – to actually spend it. We've kind of overcome the first hurdle of adoption, getting bitcoin into people's hands."

Speaking to that potential, Gradwell said technical solutions aimed at improving bitcoin – like the much-lauded Lightning Network, which could enable faster payment processing options for merchants and service providers – could tip the scales for users deciding whether to transact with bitcoin or cash out during the next bull market.

To be sure, bitcoin is still predominantly held as an inactive investment, whether custodied by an institution or individual, with 6.3 billion held in accounts that had no activity in over a year, according to Chainalysis data.

Further, one person can control multiple wallets, so the data is an imperfect proxy for the adoption and distribution of bitcoin.

And the original cryptocurrency's deflationary supply and dramatic appreciation in its 10 years of existence tend to incentivize users to hold rather than spend, all else equal – many bitcoin proponents view this as a feature, not a bug.

'A maturing market'

Whether bitcoin users are transacting with personal wallets or exchange accounts, Chainalysis economist Kimberly Grauer said the monetary aggregates for these categories have stabilized, suggesting news articles don't spur as much dramatic trading activity as they did last year.

"You don't see wild fluctuations in the wealth between [investment accounts and active transactional accounts]," she told CoinDesk, adding:

"This is a sign of a maturing market with less volatility."

Further, Chainalysis found that, from August to December, the amount of bitcoin held by service providers like exchange platforms increased by just 93,299. When viewed in light of the roughly 1 million bitcoin added to personal wallets over the same period, this implies the number of people using self-custody solutions is increasing at a faster rate than that of mere speculators.

Adoption by merchants, legitimate or otherwise, is a different story. Gradwell said activity across various payment processing services and darknet markets hasn't risen at the same rates as overall wallet activity, although it's impossible to say how much activity represents peer-to-peer commerce.

Gradwell described the current state of bitcoin wealth distribution as slightly more diverse, in part, thanks to long-term investors selling to new speculators late last year and earlier this year.

Out of roughly 28.5 million bitcoin wallets across the market, he estimated only 150,000 of them hold more than 10 bitcoin each.

Gradwell concluded:

"Half of available bitcoin is still held by investors, but it has gotten somewhat less concentrated."

Bitcoin image via Shutterstock

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