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3 things that could lift Bitcoin prices to new highs
Published by
Forbes

3m read

3 May 11.14am

Hargreaves Lansdown is not responsible for this article's content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest. Article originally published by Forbes.

After a nasty correction, Bitcoin is back big time. The “people’s currency” has gained close to 1.54% in the last seven days alone, stabilizing around the $9,000 mark.

That’s close to 50% up from its recent lows, an encouraging sign for Bitcoin bulls.

7d performance of major cryptocurrencies

Cryptocurrency Price %7d Change
Bitcoin $9158.81 1.54
Ethereum     682.70 8.97
Ripple         0.85 4.46

Source: Coinmarketcap.com 5/2/18 at 12.30 p.m.

[Ed. note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment. Disclosure: I don't own any Bitcoin.]

Will the digital currency ever reach and beat the old high? Some experts think so, provided that three things go in Bitcoin’s way.

The first thing is higher Bitcoin adoption rates as a store of value and as a medium of exchange, two functions common among conventional currencies.

That, in turn, will take a better security infrastructure. “Assuming Bitcoin will be used as store of value going forward (e.g. digital gold), a better security infrastructure overarching the entire crypto ecosystem will be needed for people to place trust in this new financial medium and start using it,” says Christian Ferri, President and CEO of BlockStar. “Once this happens, more people will jump in, so a scalable infrastructure will be crucial. “

While a better security infrastructure will help Bitcoin improve its function as a store of value, it won’t improve its function as a medium of exchange. What will? Protocol enhancements that will stabilize Bitcoin’s everyday value.  “If new enhancements are done to the protocol to allow Bitcoin (or a fork of thereof) to become a medium for everyday transactions (e.g. buy your Latte with Bitcoin), we’ll need a stability mechanism in place, on top of security and scalability mentioned above. This way that Latte won’t cost you $5 today and $50 tomorrow,” adds Ferri.

The second thing that could help Bitcoin reach new highs is the inflow of institutional money into crypto index funds. “The influx of money from institutions putting money into crypto index funds will cause a cascading, causing the herd to rush in,” says Paul A. Taylor Executive Chairman Fabric Foundation. Darren Marble of CrowdfundX agrees.”At this stage, institutional investors hold the key to Bitcoin’s growth,” notes Marble. “Concerns around liquidity, security, counterparty risk and custody of assets have so far prevented institutional investors from buying Bitcoin on decentralized exchanges.”

For this situation to change, a host of regulated exchanges must go on line.

“Only when regulated exchanges–such as tZERO, Coinlist, or even NASDAQ - go live with their secondary crypto trading platforms, will the smart money begin investing directly into Bitcoin,” adds Marble. “Once this happens, the floodgates will open and we will see a new paradigm emerge; the crypto market cap will exceed $1 billion, and lead by new all-time highs of Bitcoin.”

The third thing that could go Bitcoin’s way is the proliferation of crypto-related exchange-traded funds (ETFs). “Crypto-related exchange-traded funds may allow for simpler trading through brokerage accounts, which would also contribute to hiked up prices for Bitcoin and other cryptocurrencies,” says Chris Kline, co-founder and COO of BitcoinIRA.com. “The writing is on the wall; with so much momentum surrounding Bitcoin and other digital currencies, in my opinion, it’s only a matter of time before prices rebound again.”

And a matter of faith, too.

This article was written by Panos Mourdoukoutas from Forbes and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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Article originally published by Forbes. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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