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| Reuters |
Bitcoin seems to be wavering in recent days, remaining fairly close to its recent highs, however, as investors continue to back the crypto-currency for the long term ahead of a potential boost from a U.S. ETF that will "almost certainly" launch this year, experts say.
"The more crypto-friendly leadership of the new U.S. administration will almost certainly spur the launch of an approved BTC ETF in 2021," Alexander Blum, managing director of Two Prime, a digital asset investment fund, said in an email, referring to incoming SEC Chairman Gary Gensler.
"This can be seen by the increase in viable applications and rampant hiring for ETF-related roles at Grayscale right now. These groups are not making these investments blindly," Blum added.
Optimism about the launch of a U.S. bitcoin ETF comes amid continued signs of long-term demand for the popular crypto-currency.
Increased outflows from bitcoin exchange platforms - a bullish indicator - have shown that more investors are moving their crypto-currencies from platforms to private wallets in order to hold bitcoin for the long term.
According to data from Cryptoquant, outflows have continued to rise near the levels last seen when BTC hit its previous peak above $61,000.
"The continued reduction in the number of bitcoins available in the foreign exchange market, coupled with the creeping depreciation of fiat currencies and institutional purchases, will continue to provide macro dynamics for the continued growth and utility of bitcoin," Blum said.
But not everyone is optimistic about bitcoin.
Bank of America Corp (NYSE:BAC) made headlines this week, saying bitcoin's volatility makes it a bad destination as a store of value.
"Bitcoin has also become correlated with risky assets, is not linked to inflation and remains exceptionally volatile, making it impractical as a store of wealth or payment mechanism," Bank of America analyst Francisco Blanch wrote in a note.
But bitcoin's fluctuations aren't as pronounced as they once were and will continue to decline as new ways for institutional investors to access the popular crypto emerge, attracting an influx of liquidity.
"The lack of a derivative market has led to greater volatility. As crypto derivatives volume grows at astonishing rates (1,800% in 2020), that will change," Blum said.
Source: AFP
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