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China Fund News reporter Anman
The controversy over Bitcoin has never stopped...
Last week, Fed Chairman Powell's negative comments on cryptocurrencies caused Bitcoin to fall below $51,000 from a high of nearly $60,000. Since then, as market information revealed that the European Central Bank has accelerated its pace in preparing for the digital euro, Bitcoin prices have risen again.
However, as global payment giant Visa announced that it would allow the use of the cryptocurrency USDC to settle and pay for transactions on the network, Visa's partners will be able to pay USDC via credit cards to complete transactions with fiat currencies. Bitcoin prices have once again skyrocketed.
Although the project Visa is working on is a stablecoin, it is still good for virtual currencies. Influenced by this news, Bitcoin rose from around $55,000 to above $58,000 within 24 hours, an increase of more than 5%.
As of press time, Bitcoin is trading at $58,002. Stablecoin USDC becomes the first cryptocurrency for Visa payments
Visa, a payment giant with a total market value of US$418.8 billion (approximately RMB 2.7 trillion), revealed on the 29th that it will allow users to use the US dollar-pegged cryptocurrency USD Coin for settlement, becoming the latest mainstream financial institution to accept cryptocurrency.
Visa said it has launched a pilot program with payment and crypto platform Crypto.com and plans to offer the option to more partners later this year. USA Today reported that after Visa entered the cryptocurrency market, about 61 million customers can use cryptocurrency for payment.
Visa CEO Al Kelly has also said that Visa is looking to buy Bitcoin through vouchers.
What is USDC?
USDC was issued in 2018 by Circle, a blockchain-focused financial services provider. It is a stablecoin pegged 1:1 to the US dollar and was jointly created by Coinbase.
Circle is the company with the largest number of licenses in the world in the cryptocurrency industry. It currently holds payment licenses in the United States (including the New York State BitLicense), the United Kingdom, and the European Union. As a result, it has compliant channels for the three major currencies of U.S. dollars, British pounds, and euros to enter and exit cryptocurrency assets.
As of now, the total market value of stablecoins has reached nearly 61.7 billion US dollars. Among all stablecoins, USDT is still the leader, with its asset size exceeding 22.4 billion US dollars. USDC ranked second, with total network assets reaching US$10.7 billion. Since the beginning of this year, USDC's growth rate has exceeded 60%, and it has now become USDT's biggest competitor.
It is understood that although USDT is the leader of stablecoins, it is centralized, which is also one of the biggest shortcomings of USDT. Its issuance and storage are controlled by Tether. Therefore, there is a possibility of running away or bankruptcy.
US Bitcoin ETF may be on the way
Bloomberg analyst: Bitcoin could reach $400,000 in 2021
In addition to Visa, its peers Mastercard and Paypal, financial institutions such as Bank of New York Mellon and BlackRock have already begun to "seize the beachhead" in the digital currency market, and Tesla has even announced that it will accept Bitcoin from American users to purchase Tesla electric vehicles.
The involvement of a large number of well-known institutions in the industry has also made it more likely that cryptocurrencies will become a regular portfolio option in the future. Several investment companies said they are now pushing the U.S. Securities and Exchange Commission (SEC) to consider their Bitcoin ETF proposals.
Many people believe that a U.S. Bitcoin ETF could reduce Bitcoin’s inherent volatility while also greatly increasing the valuation of the crypto market.
Analyst Lark Davis believes that the Bitcoin ETF will drive Bitcoin prices to record levels compared to the first gold ETF launched in 2003.
Although the SEC has rejected all other ETF applications in the past, VanEck, a large US investment company, submitted a new application form to the SEC at the beginning of this year, attempting to apply for a Bitcoin ETF based on over-the-counter prices.
The proposal was recently endorsed by the SEC and published on its official website. The SEC has a limited period to approve, reject or extend the proposal for further review.
The U.S. SEC has been slow to give in, but the United States' neighbor Canada has taken the first step.
On February 13, Canadian asset management company Purpose Investments Inc. issued a statement saying that the Ontario Securities Commission (OSC) has approved the company's Bitcoin ETF and stated that "the ETF will be the world's first direct investment in physically settled Bitcoin, rather than derivatives, enabling investors to easily and efficiently enter the emerging cryptocurrency asset class."
After its official launch, Purpose's Bitcoin ETF fund exceeded US$80 million in trading volume within an hour, with a first-day turnover of US$165 million, accounting for 1.6% of the average daily turnover of the Canadian stock market, far higher than the average first-day trading volume of newly listed ETFs in Canada.
The Canadian market's recognition of the fund has also prompted other investment institutions to follow suit. Throughout February, three Canadian-approved Bitcoin ETFs were listed on the Toronto Stock Exchange.
Mike McGlone, senior commodity strategist at Bloomberg, said that Bitcoin is becoming a risk-averse global reserve asset. Due to the institutional push for Bitcoin ETFs, the trading volume in the crypto market may increase significantly. Considering past price behavior, Bitcoin may reach a price of more than $400,000 by 2021.
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