2019: Why Analysts are Still Bullish on Cryptocurrencies
In 2017, cryptocurrency millionaires were being created overnight.
Bitcoin (BTC) exploded from just pennies to nearly $20,000 in months. It quickly became the “can’t lose’ trade of the decade. That is, until 2018 rolled around.
2018 quickly became the year to forget, as Bitcoin plummeted to less than $4,000. But while many traders have become bearish on cryptocurrencies, it’s best to sit tight.
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Not only are we waiting on institutional interest, and cryptocurrency clarity, we have to consider that SEC Commissioner Hester Peirce is still putting up a fight.
"Regulators need to hop out of their helicopters and onto the free range," she says.
"It is clear that there is strong interest among some investors for this type of product, and innovators in the industry have made several attempts to respond to this interest. So far, however, the SEC has not shared these investors' enthusiasm. To date, the SEC has stopped all such retail products from getting to market. To shift my metaphor a bit, the SEC helicopters in with good intentions, but often without sufficient concern for the way its regulatory blades roil the markets, frustrate innovation, and potentially expose investors to greater risks."
In addition, she made it clear that the SEC has power to encourage innovation. For example, as companies flee the U.S. for regulatory-friendly countries, the U.S. is losing out on cryptocurrency and blockchain talent, she notes. That alone is discouraging innovation.
"...an essential step to encouraging innovations in our markets is to provide innovators with greater clarity and certainty in their interactions with the Commission and its staff. Innovators are often reluctant to ask for regulatory permission for fear of getting an adverse response. Even worse, perhaps, is getting no response at all or an unclear response. Certainty and predictability are important aspects of a pro-innovation environment."
But it's not just Hester Peirce that's getting behind cryptocurrencies and blockchain.
Governments are getting behind it, too.
Russia for example is drafting laws surrounding cryptocurrencies.
Even universities are investing in cryptocurrency, including Harvard, Yale and Stanford. For example, the CIO of Yale's nearly $30 billion endowment, David Swensen just invested in two venture funds that focus on cryptocurrency. Such an endorsement of assets is significant. Remember, Swensen is one of the top money manager pioneers, having managed one of the best-performing college endowments. No wonder other endowments have tried to replicate his investment model.
We're also just beginning to see global acceptance, as the number of Bitcoin ATMs explode.
According to Coin ATM Radar, there are now 4,112 of them around the world. At the moment, the U.S. has the most with 70 machines installed. Austria has 17. Canada has 16. Argentina now has 13. Peru and South Korea had their first cryptocurrency ATMs installed in November 2018. And those numbers will only grow. By 2023, the global ATM market could be worth as much as $145 million. That’s according to a study by the B2B firm, Markets and Markets. They note the market could grow at a compound annual rate of 54.7% over the next five years.
"The US is expected to continue to dominate the crypto ATM market during the forecast period owing to the presence of a large number of crypto ATM hardware and software providers and favorable investment environment (without any legal barriers)," the report titled 'Crypto ATM Market -- Global Forecast to 2023' noted.
While things may not be as great as they were in 2017 at the moment, we have to remember that cryptocurrencies are still in their infancy. With growing global acceptance, cryptocurrencies could explode much like Internet stocks did after they pulled back, too.
And remember, as even Warren Buffett would tell you, “Be greedy when others are fearful.”
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