Bitcoin is beginning to dominate the online world, with a huge spike in price and a number of big time endorsements coming from some of the biggest names in the financial industry, alongside plenty of celebrity endorsements, it’s interesting that Bitcoin hasn’t yet ventured onto Wall Street and other financial markets. No matter the industry, blockchain and the Bitcoin is looked at as a revolutionary game changer and this exciting development has recently boomed and is currently sitting in a bubble. However, the Bitcoin has seen a number of challenges, which may be why the cryptocurrency hasn’t seen a mainstream market acceptance as of yet. Here, we’re taking a look at why Wall Street isn’t quite ready for Bitcoin yet, and what the cryptocurrency will need to change in order to make its name on the mainstream markets.
Exchange-Traded Fund Rejection
Back in March, the US Securities and Exchange Commission rejected a Bitcoin-tied exchange-traded fund, also known as an ETF, from being listed on the market, despite Bitcoin investors Cameron and Tyler Winklevoss backing the product since its inception in 2013. The SEC stated that the lack of regulations on the cryptocurrency and the risk of fraud that comes with it are the reasons why the ETF was initially rejected. However, there have been a number of public comments and decisions that have led to the ETF rejection being reconsidered to some degree, with the case being taken back to the regulators for a second review. This was a huge hit for the Bitcoin’s prominence on the market and what was set to be a step in the right direction for the cryptocurrency.
Lack Of Regulation
A major reason why Wall Street is not quite ready for Bitcoin is due to the lack of regulation the cryptocurrency receives. With its decentralized nature, the entire concept of the Bitcoin is to ensure anonymity and fast transactions, without the government really being able to get involved. This lack of regulation however, is one of the things that has steered away large investments to the cryptocurrency, mainly due to how opaque it is. With fraud and scandals having been drawn to the cryptocurrency for a number of years since its inception, there’s a lot of skepticism in relation to how the Bitcoin can be protected, and how investors can also be sure that their money is relatively safe aside from the standard risks of any investments. The lack of regulation is one of the reasons why the ETF was also rejected, and with a number of concerns over security of the cryptocurrency, there’s a lot of considerations that Wall Street don’t seem to be willing to make just yet.
A major issue with the Bitcoin which is seeing hedge funds looking to invest in it is due to the cryptocurrency’s famous volatility. While the Bitcoin is at an all-time high at the moment and has even previously peaked over the price of gold, the market is well known for its volatility. While many people have made a lot of money on the Bitcoin in recent years, a number of investors have also lost a lot of money on it too, having sold out when the price of the Bitcoin was at a stagnant all-time low. The volatility of the industry is an important consideration for anyone looking to invest in any form of currency or asset, and in this case a number of investors are not quite willing to take the risk.
A huge reason why traditional investors that roam Wall Street are not interested in the Bitcoin is simply because they do not have a true understanding of what the cryptocurrency is and the potential it can provide. While there may be a lot of hype around the Bitcoin which is certain to cause a stir and have a few long-term investors eyeing it up, the lack of knowledge about how secure the Bitcoin is, is likely to have an impact on how far people are willing to go when it comes to investing in the cryptocurrency. There’s a lot of opportunities for people when it comes to the cryptocurrency, but if they’re unsure on what the cryptocurrency even is, then they’re not going to invest in it.
Bitcoin is an extremely exciting option and with more people having already invested in the cryptocurrency and many others looking at the cryptocurrency’s potential. With more investments ready to come to light and legislation from other countries likely to lead to a much more regulated currency/asset, the chances are Wall Street are likely to choose the cryptocurrency in the very near future, but in its current state, it’s not quite ready yet.