Tesla’s U-turn on Bitcoin payments has sent shockwaves across the cryptocurrency market, but it’s unlikely to thwart the cryptocurrency’s institutional adoption in the long run
On May 11, 2021, Bitcoin was sitting at $57,000. On May 18, 2021, the price was $42,000.
This has largely been driven by Tesla CEO Elon Musk’s decision to stop allowing Bitcoin as a form of payment for his automobiles.
He explained this decision on Twitter, saying:
Tesla has suspended vehicle purchases using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. Cryptocurrency is a good idea on many levels, and we believe it has a promising future, but this cannot come at a great cost to the environment. Tesla will not be selling any Bitcoin, and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.
He then went on to cite a graph showing the increasing energy usage of mining Bitcoin. Musk later suggested in a Twitter reply that Tesla may have or did sell its Bitcoin holdings. This further caused the price to tank.
While he later clarified that Tesla has not sold its Bitcoin, his reasoning brought up many environmental concerns and the concern that a cryptocurrency’s price could be so heavily influenced by one person. Some have speculated that institutions, who have only just recently accepted crypto in some form, will reverse or slow their adoption of Bitcoin. While the past couple of days may delay some institutional adoption of Bitcoin in the short term, in the long term, investors should not worry that Bitcoin will fail to be adopted by institutions.
Tesla is only one firm
Elon Musk’s decision to suspend Bitcoin payments called into question the adoption of Bitcoin as a means of purchasing goods. However, research by the Nasdaq suggested that 90 percent of consumers had some interest in Bitcoin products. The thing holding these people back is education on crypto and how to get into it. However, fintech companies like Venmo, PayPal and Cashapp are all now rolling out the ability for consumers to purchase Bitcoin. Currently, 17 percent of Americans own crypto, and as it becomes easier to purchase, more firms are likely to accept it as a form of payment. Already some athletes are accepting payment in the form of Bitcoin over USD.
While Tesla’s suspension of Bitcoin hurt its adoption as a means of purchasing goods, its adoption as a store of value has not faltered.
For proof, look no further than its recent and growing adoption by bulge bracket banks. Goldman Sachs recently established a crypto trading desk and derivatives tied to Bitcoin’s price.
People should not be concerned that not every bank has started offering these products yet. It needs to be noted that these are large publicly traded companies that cannot just start offering Bitcoin products immediately. Offering these products drastically changes the risk profile of the firm. It was not too long ago when these same investment banks watched AAA-rated collateralized debt obligations fail, causing the Great Recession. Banks know there is a high demand for these products, causing many to offer them and others to start their due diligence and research the possibillity.
What could accelerate the institutional adoption of Bitcoin is inflation fears
It has long been argued by Bitcoin bulls that its use case as a store of value would allow buyers to hedge against the inflation of the US Dollar. For most of Bitcoin’s lifespan, there has never been a real concern of widespread inflation. The Federal Reserve announced in 2012 that it was targeting a yearly inflation rate of two percent, and it has largely fallen short of this target. However, a global pandemic called for unprecedented inflows of cash into the economy. In October 2020, 22 percent of all US Dollars in circulation had been created during 2020. We have not seen massive inflation yet because the economy was largely closed, and people could not go out and spend this money. As the vaccine has rolled out and stores have opened, concerns about inflation have been raised by many investors. The Federal Reserve has largely dismissed these claims, but the monthly inflation rate is already sitting at double the target for this year. Countries that already struggle with inflation, like Argentina and Venezuela, showed increased trade volumes of Bitcoin when their local currency fell in value in comparison to the US Dollar. Unfortunately, infrastructure in these countries also makes purchasing the currency difficult. Recent widespread adoption by apps like Venmo, PayPal and Cashapp will make it incredibly easy for US investors to hedge inflation by purchasing the digital asset. If inflation continues, institutions may also want to protect their clients, which would further accelerate the adoption of Bitcoin by institutions.
Not every institution needs to adopt Bitcoin
During a recent interview, famous hedge fund manager Bill Ackman was asked about his views on crypto and if his fund would invest. He said he is fascinated by the technology but that he would not invest his own funds into it. Other famous hedge fund manager, like Carl Ichan, have said similar things. This does not spell the end of the institutional adoption of Bitcoin. Bitcoin is not a stock or a bond. The Ben Graham era equity investors are not going to make a foray into a currency. What we will see and what we have seen are crypto-specific hedge funds and investors like Cathie Wood that have an investing philosophy that Bitcoin fits into, as seen in her investment in Grayscale.
Recent capital markets and M&A activity
Investment banks are helping firms like Coinbase grow through capital markets and M&A. Coinbase announced that it is raising capital with convertible bonds. Since the IPO, it has been widely known that investing in Coinbase was an indirect investment in Bitcoin and crypto. The institutions buying these bonds are knowingly indirectly making an investment that has exposure to the price of Bitcoin and market demand for Bitcoin and crypto.
While institutional adoption of Bitcoin may endure a small setback from Tesla, overall its implementation will not slow down.
Second US Bitcoin Futures ETF Was Just Launched
As you probably know by now, the launch of a BTC ETF was the main trigger of Bitcoin’s price according to some analysts.
It’s been also revealed that there’s a new BTC ETF that tolled out the other day.
Valkyrie Investments, which is an alternative asset management firm, launched the country’s second Bitcoin futures ETF, according to CEO Leah Wald.
Valkyrie Bitcoin Strategy ETF
It’s been revealed by the official notes that the new product is called the Valkyrie Bitcoin Strategy ETF and it will trade on the Nasdaq under the ticker symbol BTF.
This important launch comes following ProShares’ Bitcoin futures exchange-traded fund – this one exploded onto the market on Tuesday with the second-biggest ETF launch of all time.
The online publication the Daily Hodl notes that like ProShares’ Bitcoin Strategy ETF (BITO), the Valkyrie ETF does not invest directly in BTC but it provides price exposure to Bitcoin futures contracts.
ETF’s prospectus notes the following:
“Under normal circumstances, the fund will seek to purchase a number of Bitcoin futures contracts so that the total notional value… of the Bitcoin underlying the futures contracts held by the fund is as close to 100% of the net assets of the fund as possible.”
Regarding Bitcoin’s price, at the moment of writing this article, BTC is trading in the red and the king coin is priced at $60,971.93.
While some investors freaked out due to this correction in price, others are saying that this is just another opportunity for accumulation.
JPMorgan addressed the price of Bitcoin
JPMorgan also addressed the moves in the price of Bitcoin the other day.
While most enthusiasts on crypto Twitter said that the new BTC ETF has been fueling this rise in price, JPMorgan believes something else.
The banking giant said that the new Bitcoin Futures ETF is not the reason behind BTC’s surge to a new ATH.
Company strategists told Bloomberg that concerns over inflation are driving up the top crypto’s price. They believe that this is not about the launch of the first-ever BTC Futures ETF.
Bitcoin Dipped to $60K Losing $7K Since Tuesday’s ATH (Market Watch)
Bitcoin lost more than $7,000 in a few days and dipped below $60,000. Ethereum also went down hard after failing to chart a new ATH.
Following the past several days of surging higher and higher, BTC corrected hard in the past 24 hours and even dipped below $60,000 briefly. Most altcoins followed suit, and the entire market cap lost more than $150 billion since its peak earlier this week.
Bitcoin Lost $7K in Days
The main focus in the cryptocurrency space in the past week or so was on the first-ever Bitcoin Futures ETF going live in the United States on Tuesday. The euphoria for such a long-anticipated product propelled a massive price surge for the digital asset, which broke above its April ATH and charted a new one a day later at $67,000.
However, it failed to remain there, and the bears started to push it south gradually. As reported yesterday, BTC dropped to $63,000, but the correction was far from over.
In the past 24 hours, the cryptocurrency kept losing value. This time, it fell to just under $60,000. As such, it meant that BTC had declined by more than $7,000 in a matter of days.
As of now, it has bounced off and recovered some ground. Nevertheless, it’s still 4% down on the day, and its market capitalization is below $1.150 trillion.
Alts Also See Red
The alternative coins have followed their leader south. Ethereum was close to breaking its own ATH at nearly $4,400 a few days back but failed and dropped to $3,900 yesterday. As of now, ETH stands at just over $4,000, but it’s still 3% down in a day.
Solana was also inches away from painting a fresh all-time high. Now, though, SOL trades at $200. Binance Coin, Cardano, Ripple, Polkadot, and Terra are also in the red.
Minor gains are evident from Dogecoin, Avalanche, and Chainlink. More increases come from Huobi Token (11%), Fantom (11%), Curve DAO Token (10%), Harmony (9%), and OKB (7.5%).
In contrast, OMG Network, Flow, The Graph, SushiSwap, Stacks, and ICON have lost the most in a day.
The cryptocurrency market cap is down to $2.530 trillion, meaning it has shed off $150 billion since the peak two days ago.
This crypto soars higher than Bitcoin and Ethereum
The price of bitcoin is now approaching its all-time high on April 14, when this crypto was valued at $ 64,800, and shows no signs of slowing down. Meanwhile, all kinds of other digital assets, from Ethereum to Dogecoin, are reaching impressive heights as well.
Behind the scenes, however, one coin is stealthily gaining traction and outperforming the big names in the cryptosphere. RBIS, the native token of the ArbiSmart platform, has quietly continued its ascent, maintaining a steady increasing trajectory, since its launch in 2019. It has already risen by 662% and analysts are forecasting an increase of up to 40 times the current price of ‘by 2023.
A lucrative and low-risk strategy
The ArbiSmart platform performs automated cryptocurrency arbitrage. This means that it takes advantage of temporary price disparities, which are brief moments when a digital asset is available at different prices on multiple exchanges, at the same time.
ArbiSmart, connected to 35 exchanges, searches for disparities on hundreds of crypto-assets, simultaneously. When it finds a price difference, the algorithm generates a profit by buying the asset on the lower priced exchange, then instantly selling it on the higher priced one, before that the gap has not had time to close.
Because price disparities occur as well in a rising or falling market, ArbiSmart provides valuable hedge against a crash. If the market suddenly plunges and the recovery ends abruptly, your crypto will not lose its value, but instead will continue to generate a steady and reliable profit.
From the user’s point of view, nothing could be simpler. Just register, make a deposit and that’s it. Once you’ve deposited fiat or crypto, the algorithm does everything else. Your capital is automatically converted into RBIS and put to work, 24/7, to trade crypto-arbitrage. Profits start at 10.8% per year (0.9% per month) and reach up to 45% per year (3.75% per month) depending on the size of the investment.
A considerable and stable profit
Since price differences between exchanges occur consistently in both a bull market and a bear market, you can anticipate your annual rate of return against crypto arbitrage with a high level of accuracy. Using ArbiSmart’s yield calculator, you can see exactly how much you will earn over a given period, starting from a given deposit amount, taking into account compound interest and the changing value of the RBIS token.
In addition to profits of up to 45% per year through cryptocurrency arbitrage and compound interest, passive income can also be collected for the provision of liquidity. By locking your capital in a closed savings account for a predetermined period, you can earn up to 1% per day, just for having stored your funds on the platform.
ArbiSmart also offers huge capital gains. The RBIS token has already reached more than 6 times its starting price and its value is expected to soar in the coming months.
Growing demand globally
In 2020 ArbiSmart’s annual growth was 150% and so far 2021 has seen growth of 550%. During this time, the development team has not been idle. Major infrastructure upgrades have been implemented, and from Q4 2021 to Q1 2022, a series of new RBIS utilities are launched, including an interest-earning crypto and fiat currency wallet, yield farming as well as a crypto credit card.
The fourth quarter of 2021 will also be marked by another event likely to increase the demand for tokens: the listing of the RBIS. Once globally tradable, RBIS will become accessible to people for whom this token was inaccessible due to ArbiSmart’s European license. These include people whose account registration has been refused because regulatory requirements have not been met, residents of countries where ArbiSmart cannot accept customers, and people who wish to remain anonymous and do not not provide KYC (Know Your Customer) documents.
As demand for the token climbs this quarter, with the introduction of new RBIS utilities and listing on global cryptocurrency exchanges, the limited supply of tokens, the total of which is permanently capped at 450M, will decrease.
Whether in a bullish or bearish market, RBIS has proven to be a solid and lucrative investment opportunity, and in the coming weeks, the value of the token is likely to jump significantly. So it seems like now is the best time to buy, before the price of RBIS goes up further. Buy RBIS today.