Banks actively adopt Bitcoin to provide long-term value support for the bull market

The market adjusts normally during a short-term decline

Recently, cryptocurrencies have once again fallen after breaking through highs. According to OKEx market data, BTC quickly fell to $53,272 after rising to a high of $61,829, a loss of $8,557 in less than a day. Although the market has recovered, it has basically fluctuated around $55,500, neither falling further nor rising significantly, but the trading volume is relatively sluggish.

Although the decline this time seems large, a 13.8% drop is not large compared to the recent volatility. It’s just that the higher the point, the larger the decline will be.

Looking at the market information, there have been no obvious negative signals recently. No major events that have affected the market have occurred, whether in the macro-economy or the regulatory status.

Therefore, whether from the perspective of market development or market information, this decline is just a normal adjustment after reaching a high level. Overall, BTC has three consecutive declines, but it is still at a high level, and the probability of continued market fluctuations is greater.

However, there are indeed some uncertainties at present, especially those from regulatory policies, which may have a certain impact on short-term market conditions.

The Bitcoin market has expanded rapidly this year, and the rising market has spawned more profiteers. For example, the trading volume of South Korea's cryptocurrency market exceeded the average daily trading volume of the country's stock market last Sunday.

CoinMarketCap data showed that on Sunday, the total 24-hour trading volume of major South Korean cryptocurrency exchanges UPbit, Bithumb, Coinone and Korbit exceeded $14.6 billion. On Friday, the Korea Composite Stock Price Index (KOSPI) had a trading volume of $14.5 billion and the Korea Securities Dealers Automated Quotations Index (KOSDAQ) had a trading volume of $10 billion.

This will change the capital market. The National Tax Service of South Korea will require that overseas financial accounts with balances exceeding 500 million won, including virtual assets, must be reported starting next year.

Countries such as the United States may ban the transfer of capital to assets such as Bitcoin.

According to Cointelegraph, Ray Dalio, founder of Bridgewater Funds, said in an article that tax changes in the United States and other countries may be more shocking than expected. If guided by history and logic, cash-strapped policymakers will raise taxes and do not want these capitals to be transferred from debt assets to wealth assets and other tax areas, so they are likely to prohibit the transfer of capital to other assets (for example: gold, Bitcoin, etc.).

Although the above phenomenon is an inevitable problem in the process of Bitcoin's mainstreaming, it is also beneficial to cryptocurrencies in the long run. However, due to regulatory gaps and differences in cognition, there is some uncertainty in the current attitude and policy towards cryptocurrencies, which may lead to some crises in the short-term market and affect market development.

However, whether the regulation becomes tighter or looser, it will not change the long-term development trend, because the mainstreaming of cryptocurrency has not only promoted its strong popularity, but also brought new recognition operations from the government and the central bank.

Cryptocurrency enters mainstream finance

As the Bitcoin market develops, its value is also expanding. The powerful profit effect, coupled with the asset's safe-haven properties, has brought a strong market foundation for Bitcoin.

Morgan Creek founder Anthony Pompliano said BTC is able to generate substantial returns while also serving as a safe haven against risks in traditional financial markets. Bitcoin is the top predator in financial markets. Pomp called traditional stocks a manipulated market compared to crypto assets.

At the same time, the financial foundation power of Bitcoin has also begun to emerge. Cameron Winklevoss, co-founder of Gemini and Bitcoin billionaire, said on Twitter that legal currency has been in scale for decades, but still has not reached more than $1 billion in unbanked deposits. Bitcoin can be applied to anyone anywhere on the Internet... everywhere. It has greater social scalability.

Based on Bitcoin's unique technological advantages and properties, Bitcoin's financial status has also expanded on the basis of "digital gold".

Max Keiser, a Wall Street financial analyst and Bitcoin supporter, said Bitcoin has the potential to become the new base currency and replace the entire $5 trillion foreign exchange trading market. Bitcoin makes banks like Citibank redundant, and it can conduct currency transactions without the need for any bank.

Keiser said Bitcoin has advantages in global payments due to its decentralized, deflationary and secure nature, which puts the flagship cryptocurrency in a position to become mainstream. Keiser stressed that Bitcoin's advantages as a medium of exchange for global payments have made banks, including Citibank, obsolete.

It is Bitcoin's powerful financial attribute advantages that enable it to achieve greater value development trends beyond the investment effects brought about by market developments.

According to statistics, the total market value of global cryptocurrencies exceeds $1.73 trillion, which has now exceeded Canada's GDP. According to the latest report released by the International Monetary Fund (IMF), Canada is the world's ninth largest economy with a GDP of $1.6 trillion.

Rather than saying that this bull market is the result of institutional demand for safe-haven assets, it is more accurate to say that it is the result of the gradual outward expansion of the Bitcoin financial system.

Faced with the rapid expansion and strong consensus of cryptocurrencies, many countries and regions have begun to re-understand and build a new financial ecosystem. In addition to the continuous promotion of compliance and security in policies, mainstream financial institutions have actively adopted cryptocurrencies to cope with the increasingly strong demand for encryption.

Visa is currently the world's largest international credit card organization

In a conversation with Fortune CEO Alan Murray, CEO Al Kelly said cryptocurrencies could become "extremely mainstream" in the next five years. While not ruling out that they could eventually become a fad, Kelly wants his company to be in the middle of a crypto boom. Kelly divides cryptocurrencies into two categories. He sees Bitcoin as the digital successor to gold, and he mentioned that Visa is working on allowing Bitcoin to be purchased and seamlessly converted into fiat currencies. Kelly also predicts that the other category (digital currencies backed by fiat currencies) could become powerful payment tools.

Morgan Creek founder Anthony Pompliano tweeted: "Every central bank will eventually convert its assets into Bitcoin."

Previously, French lawmakers signed a petition urging the central bank to buy Bitcoin.

According to U.today, Jean-Michel Mis, a member of the French National Assembly (the lower house of the French parliament), has signed a petition to the French Senate to authorize the French central bank to purchase Bitcoin and other cryptocurrencies. The petition cites MicroStrategy and Tesla as companies that have purchased large amounts of Bitcoin, while also mentioning Miami's plan to invest its reserves in Bitcoin.

The central bank's active adoption has made Bitcoin not simply a financial product purchased by institutions, but has gradually risen to become an important part of the entire financial system and integrated with mainstream finance.

Bitcoin has become a new financial product recognized and constructed by mainstream finance. Its development trend determines the upgrade of economic value. This is also an important source of the view of Bitcoin's long-term bull market, and the prediction of Bitcoin prices is becoming clearer.

Dan Morehead, CEO of blockchain hedge fund Pantera Capital, said in an email that Bitcoin is now ahead of its April 2020 forecast timeline and is on track to reach $115,000 this summer.