Finixio Co-Founder: Bitcoin’s Recent Peak Is a Result of Its Utility
New York, NY - ( NewMediaWire ) - December 12, 2020 - Many people got rich in late-2017 when Bitcoin jumped to its peak of a few hundred dollars under $20,000.
Awe-inspiring stories of teenagers becoming millionaires thanks to Bitcoins they mined out of curiosity when they were pre-teens were everywhere. Everyone was rushing to either start mining or learning how to day trade cryptos because it seemed like anyone who had anything to do with cryptos was getting so, so, so rich.
However, the crypto bubble burst soon thereafter, ushering in what some called a crypto humbling. Bitcoin plummeted, settling at around $7,000 in less than a year.
So, what has happened in the meantime? What has changed? Why is Bitcoin’s value back up to its all-time high again? Will it plummet again?
Finixio is one the leading media companies that has published content analysing and providing expertise on investments in the crypto industry over the past few years. They have recently suggested that Bitcoin and other crypto currencies have transformed into financial products that have more than just value as speculation, and are now able to provide serious utility to their investors.
It has been very exciting watching Bitcoin climb back up over the past two months. It’s all the more exciting because this time, there will be no more plummeting. This time, we’re not looking at a bubble. Where Bitcoin’s previous high-water was a result of hype, the current one is a reflection of its utility.
The previous peak was caused by over-excited individual traders. This time, institutions are standing behind Bitcoin, giving it legitimacy.
Let’s take at a few key reasons why Bitcoin is going up…...
PayPal Enabled Crypto
Last month, PayPal dropped the waitlist to buy, hold and sell cryptocurrency in the U.S. a move predicted by Finixio in 2019. As co-founder Adam Grunwerg has said, “We saw the move by Paypal some time ago. It’s part of a growing acceptance by mainstream institutions to accept the validity of bitcoin, as it moves further into becoming a widely accepted currency.”
The move means that all American customers are now able to purchase cryptocurrency, like Bitcoin, from their PayPal accounts.
PayPal essentially moved up its deadline to enable cryptocurrency purchases. Although the service has been available to some American PayPal users, the company was not expected to roll out the service nation-wide yet. Instead, it was approving the service to some users on a case-by-case basis from a waitlist that it had developed.
In addition to enabling the service nation-wide to all PayPal customers, the company increased the limit on crypto purchases to $20,000 per week. The company is expecting to enable the service in other countries in 2021.
PayPal originally announced its cryptocurrency service in a surprise statement in October. This is what Dan Schulman, PayPal’s president and CEO, cited as the company’s motivations:
“Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange.
“We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”
This powerful endorsement contributed immensely to Bitcoin’s recent rise. PayPal is a household name, which is why investor confidence in cryptocurrencies has skyrocketed recently.
Publicly-Traded Companies Investing Large Chunks of Balance Sheet into Bitcoin
As mentioned above, individuals caused the crypto bubble in late 2017. So, it is not uncommon to expect hype to be fairly common among individual investors.
However, publicly-traded companies setting aside large chunks of their balance sheet to purchase Bitcoin was practically unheard of even last year.
“Major businesses have considerable sums on their balance sheets and this is in an uncertain economic climate” Adam Grunwerg of Finixio explains. “A lot of them are increasingly looking to bitcoin to diversify their portfolios and have a hand in this emerging market” .
As evidence of this, recently, the payment processing company Square made a massive bitcoin purchase. They spent $50 million to purchase 4,709 bitcoin. $50 million is a significant amount of money for any company, regardless of its size, but it’s only a fraction of what business intelligence company MicroStrategy spent on bitcoin about a month ago.
In one of the biggest institutional bitcoin purchases of this year, MicroStrategy bought $425 million worth of the cryptocurrency. As you can imagine, these massive purchases are the wind beneath cryptocurrency adoption’s wings.
MicroStrategy set the stage and companies like Square followed. Many more large institutional purchases are expected soon and bitcoin’s utility will continue to increase as it reaches new all-time highs.
Square’s $50 million purchase accounts for about 1% of its cash reserves. The company’s investment whitepaper cites “rapid evolution of cryptocurrency and unprecedented uncertainty from a macroeconomic and currency regime perspective” as the reason for the purchase.
Essentially, what this means is that countries are printing way more money than they should be. More money means inflation and companies are using bitcoin to hedge against it. That’s incredible. It lends credibility to the cryptocurrency’s utility for sure.
Even JPMorgan Launched a Crypto Product
JPMorgan CEO Jamie Dimon has been one of the staunchest opponents of cryptocurrencies and bitcoin. Recently, he even said that bitcoin is not his “cup of tea”. However, it nonetheless seems to very much be JPMorgan’s as the investment bank recently launched its own coin.
JPM Coin is not a traditional cryptocurrency. It is actually a digital token for internal use by the bank’s institutional clients. It’s not decentralized and was developed on an internal blockchain unit called Onyx. However, the coin is still a rampant endorsement for the technology. As even beacons of legacy institutions inch towards it.
Adam Grunwerg of Finixio gives his take on this. “The link up between this revered old bank and the modern technology of blockchain just shows how quickly things are changing. When major institutions that have long held a bias against crypto are now embracing it, you can clearly see the direction of travel for the rest of the investment world.
Meanwhile, Onyx CEO Umar Farooq gave his view of the link up: “We have always believed in the potential of blockchain technology, and we are supportive of cryptocurrencies as long as they are properly controlled and regulated.”
Bitcoin just has so much potential. It can be utilized in so many ways. Hedging against uncertainty is just one of its utilities and how it will be used in the future remains to be seen.
To quote veteran investor and trader Paul Tudor Jones, “No one knew how to value it because of the world of possibility that lay ahead … I’m going to assume that it’s the wrong price for the possibilities that it has. And I’m going to assume that the path forward from here is north.”