Bitcoin has arrived.
For the last few years, we discussed how Bitcoin was being hijacked from its original purpose. With so much interest coming from Wall Street it is not surprising.
The news of late is the fact that institutions are starting to allocate a portion of their portfolios towards the leading cryptocurrency. This became possible with the approval of the Bitcoin ETFs earlier this year. It opened up the door for a different type of investor.
What this means is big money is starting to make its move.
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Institutions Are Taking Over
Many within cryptocurrency will applaud this move.
From a price perspective, this presents a remarkable opportunity. Since most people are in the "price go up" camp, this is to their liking.
Unfortunately, this is 90% of crypto.
Big money means prices will move. We have some big players starting to adopt Bitcoin. As stated, the ETFs gave pension funds and other retirement account access.
The State of Wisconsin made news with this move:
The U.S. state of Wisconsin purchased 94,562 shares of BlackRock’s iShares Bitcoin Trust (IBIT) in the first quarter of the year, a filing shows. The shares are worth nearly $100 million.
This is the pension fund from one state, in a single quarter. What happens if we extrapolate that across all 50 state, with all the unions such as teachers and firefighters, and do it over the period of a couple years?
What happens when other countries get involved?
Here is the clout we are looking at with these institutions. How many individuals would it take to generate that type of volume?
The data is reflecting how things are changing:
By Feb. 15, Bitcoin ETFs accounted for about 75% of new investment in the world’s largest cryptocurrency as it surpassed the $50,000 mark.
Source
We know things are higher 3 months later. It is not going to be surprising to see the reports for quarter 2. I would be there are other institutions that become public like Wisconsin.
In other words, they are not the only one jumping in.
Feeding The Traditional System
All of this leads to the hijacking by Wall Street.
We have touched upon how entities such as Blackrock are taking stake in the public Bitcoin mining companies. Over time, this could give them more control over the network.
The coins are already piling up with custodians. Those who are holding the BTC on behalf of these ETFs are in full control. As stated in the past, Michael Saylor is a small fish. Microstrategy is holding about $6 billion in Bitcoin.
As a comparison, Blackrock's ETF, which launched in January, is at $18.5 billion.
In addition to the potential of holding power over the networks along with the majority of coins. traditional finance is looking at pulling the volume.
Trading activity in Bitcoin could face a challenge. A company like Coinbase is going to see its volume decline as transactions are conducted through the ETFs. This means DeFi is facing competition from TradFi.
Naturally, Coinbase is as Wall Street as it gets these days. The point is the big money is going to flow to the derivative (ETF), with the underlying asset sitting with a custodian. As people trade shares of the ETF, they are not affecting the totality of the Bitcoin holdings. The shares of the ETF are simply transferred around.
Ethereum ETF?
There are many speculating about what the SEC will do regarding an Ethereum ETF.
It appears, in trying to read the tea leaves, that most believe they will keep getting denied. Word is starting to spread how the SEC views Ethereum as a security.
If, or when, this does get approved, even if it is after a new SEC chair, it will simply expand what we are referring to.
What happens when billions of dollars flow into these ETFs. While it will not likely match BTC, it will also pull trading activity away from the chain. Once again, the volume will, to a certain degree, be within TradFi.
A company like Blackrock can simply place a .25% fee on the holdings, just like they did with the Bitcoin ETF. With billions, that adds up to a serious amount of money.
Wall Street Immersion
Those who are stating that institutions are arriving in Bitcoin appear to be correct. We are seeing weekly inflows nearing a billion dollars for these ETFs. Amounts of this size are not individual retail investors.
We are moving away from the tenets that Satoshi Nakamoto laid out more than a decade ago. The flaw in the design set us on this path.
From an investment perspective, this will probably do very well for people. As a counter to the traditional financial system, it is the exact opposite.
Bitcoin is actually feeding Wall Street. Blackrock is going to such in tens of millions in fees from the Bitcoin ETF.
Pensions. hedge funds. Sovereign wealth money.
It is all likely to find exposure to Bitcoin. Unfortunately, it seems like most of it will be through the traditional Wall Street avenues.
That said, the institutions are arriving. It is a different game now.
Posted Using InLeo Alpha
I think this is FOMO kicking in. Initially only small investors and crypto bros were into BTC. People were even ridiculing and waving it off as a passing fad, expecting it to die out eventually. But the problem was, it didn't. The price went down during the bear but it came back stronger. The SEC recognized it and allowed ETFs. People still see it go even higher, and just now want to get in on it. I expect a faster snowball effect in the coming months.
Market action is rather predictable since we are dealing with the human emotion of fear and greed.
The total Market cap is growing massively! I can't wait to see it's impacts on Leo token and the Hive blockchain. Hive is still pegged to Bitcoin so more bitcoin rises so too will Hive
Ultimately, market cap will mean nothing since it will be a rough estimate.
For example, what if you have a project you tokenize and it is worth $5 million. It is not going to be factored into that since sites like CoinGecko likely will not have it. However, that is real money that, if the infrastructure is in place, the holders of the token can collateralize for further economic productivity.
We are going to see "market caps" in the quadrillions when all this stuff is tokenized.
I honestly do not think we will see an ETF for ETH unless it reverts to PoS.
So if Bitcoin (BTC) isn't fulfilling the promise of Bitcoin (BTC)-- ???-- as envisioned by Satoshi Nakamoto, is there a cryptocurrency out there which is? I want to say Hive (HIVE), but I know that I'm being biased.
Despite being a Top 1% cryptocurrency by marketcap, Litecoin (LTC) continues to fly under the radar. Maybe Litecoin (LTC) assumes the mantle abandoned by Bitcoin (BTC)? These days, LTC is just BTC without the ETFs and without the BTC love.
Litecoin could be. I dont know the breakdown of the mining polls and how (de)centralized that is. It is possible it fits what you are referring to. The challenge I see is it is also capped. Could Wall Street at some point turn to LTC the same way as BTC? It is possible.
Is it Hive? Well we are not even on the radar of the off radar but, from the foundation, it has the potential. There is enough distribution to be considered decentralized although more distribution is needed. HBD is an algo coin, not tying itself to the traditional banking system through its asset backing (i.e. introducing counterparty risk).
But I, too, am biased. We will have to see how things unfold in the coming 2-3 years with Hive.
While Bitcoin is capped at 21M BTC, Litecoin is capped at 84M. Like Bitcoin, Litecoin also goes through a halving process. Even if capped, it will take a long time to reach that cap; long enough that none of us will be around to care about it even with shorter block creation times.
The big difference between the 2 networks is the mining algorithm. While both networks use PoW, Bitcoin uses SHA256 and Litecoin uses Scrypt. The Scrypt mining algorithm is easier to implement, which allows for more miners to participate. Even if they form mining pools (which is where the centralization is most likely to take place), there will be more mining pools for Litecoin than for Bitcoin.
Scrypt also allows for shared mining between networks which use it, which is what allows Dogecoin mining rigs to also be used to mine both $DOGE and $LTC. This shared mining ability also allows for greater network security as demonstrated by Dogecoin: after that hack which nearly ended Dogecoin shortly after it came online, no hack has taken place after it switched to shared mining (Auxiliary PoW) ten years ago.
I think we will see a lot less volatility moving forward. The chance for the average Joe to accumulate bitcoin is over.
Not so... That is one of the things that is not flawed about BTC. You don't need anyone's permission, just go get some, You can get it on Leodex right now LOL ;)
The fact that the big guys are beginning to adopt and approved the use of bitcoin either as payment or a form of transaction is a valid reason my interest keeps growing. Again, some government banning are doing so because bank will have noone to charge unnecessarily. My country for instance
Yeah, BTC was flawed from the genesis. But that is why we keep building, right?
!LOLZ