Does bitcoin still have a chance? These are my TOP 3 reasons why he still breaks records (COMMENT)

The markets are not in a very good mood this year. Indices, stocks and cryptocurrencies are falling, while some commodities are rising high. Therefore, many have traditionally wondered if bitcoin still has a chance to return to its previous values ​​after these declines.

In this article, I would like to summarize three very important points that many people forget at this time, and because of which bitcoin can once again attack the highest goals.

Institutions become long-term “intents”

If we look at what was behind the growth of cryptocurrencies in 2020 and 2021, then it was clearly the arrival of institutional investors. Cryptocurrencies are no longer just a toy for ordinary investors, and some huge companies also have their funds in bitcoin.

Among the most well-known are, for example, Michael Saylor’s Microstrategy, which is one of the big supporters of cryptocurrencies, or the Tesla car company, led by Elon Musk. Thus, completely new money was poured into bitcoin and other known cryptocurrencies, which had not been in cryptocurrencies before.

The main difference between ordinary investors and institutions is that companies buy such assets over a longer period of time. This is quite common in companies, and in most cases they try to buy the asset for several years and then hold it for several years.

At the same time, smaller purchases and increases are not much addressed in such purchases, so it is a completely different strategy than that used by most ordinary investors.

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But how can I confirm that the institutions do not sell? Quite simply. Large companies have to publish their results regularly, most often on a quarterly basis. It is there that we can compare how many bitcoins they hold and whether they sold some or bought them. The vast majority of well-known companies that have invested in bitcoin still hold their coins, which means they believe in the sector.

Bitcoin as a legal currency

In addition to the arrival of institutional investors, the years 2020 and 2021 were also crucial in that the first countries “threw themselves” into the bitcoin. Both El Salvador and the Central African Republic are currently two countries on two different continents, where bitcoin is recognized as legally valid.

Of course, these are not very important states for the global economy, but it also indicates a certain trend of adoption. It is quite common in developing countries in Africa and Latin America for the population not to have access to bank accounts. That is why bitcoin or other cryptomens may be the ideal solution.

More than 25% of El Salvador’s GDP is remittances, ie payments that are sent back to El Salvador by residents living abroad. If the local population does not have access to bank accounts, they must use various intermediaries to transfer these funds, who charge very high fees. This is the problem solved in the bitcoin country.

Bitcoin ETFs and new investment opportunities

Another factor that can get bitcoin to new highs is the first real bitcoin ETF in the US. At the end of last year, the first bitcoin ETFs, which monitor futures bitcoin contracts, began trading on US stock exchanges, but we have not yet seen a spot (ETF that will actually buy bitcoin). Australia and Canada, for example, already have it, but we are still waiting for its permission on the US markets.

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The ETF is a financial product that is regulated by a local regulator, so companies and funds there can invest heavily in it. And this is one of the last pieces in the puzzle. Very easy and secure access for large financial institutions and banks to purchase bitcoin.

There are, of course, many more reasons for growth, and I could also mention the deflationary nature of bitcoin due to its limited quantity or halving cycles. In the current situation, however, these 3 reasons are the strongest foundation that should help cryptomen fans raise their heads.

The author is an external professional contributor of the FonTech.sk portal

This article, opinions and information contained herein are for informational purposes only and should not be construed as investment advice. Any content on the FonTech.sk portal does not serve as investment advice and we recommend every reader to consider the risk of financial loss before trading on the stock exchange.