The idea of a digital currency is not new but until the relevant regulatory structure is in place many seasoned investors and institutions are wary. However, Bitcoin is one such digital currency which has been in vogue over the last few years and today hit an all-time high of $1206.60 per single “coin”. So, why is there so much interest in Bitcoin and is this the start of something special?
Speculation
There is intense speculation that the Securities and Exchange Commission (SEC) could authorise the creation of the world’s first Bitcoin exchange traded fund. This would be a phenomenal move for the digital currency which has been around for some time but is not yet seen as mainstream. The Winklevoss Bitcoin Trust is one of three companies which have put proposals to the SEC which is expected to announce its decision on 11 March.
Some experts believe it unlikely that approval for exchange traded funds (ETF) will be given this time round however slowly but surely progress is being made. One analyst puts the odds at less than 25% but if this more recognised digital currency was to be approved for ETF trading this would be a monumental shift. Some people have speculated that under President Donald Trump there is more chance of new technologies such as the Bitcoin digital currency making it into the mainstream market.
Volatile Bitcoin price
Those who follow the Bitcoin phenomenon will be aware that back in early 2013 the digital currency was trading at around $30 although by May 2013 it reached a phenomenal $1147.25. The price then subsequently crashed down to around $230 in early 2015 and steady progress has been made to the recent all-time high. There is no doubt this that Bitcoin is more recognised and more used today than it ever has been. However, there are significant concerns regarding money-laundering and an appropriate regulatory structure if it is to be traded globally.
It is interesting to see that Japan is on the verge of bringing in regulations regarding Bitcoin trading and China is seen as more in favour of recognising the digital currency. Once regulations are in place this will allow banks and other institutions to trade Bitcoin as they would any other currency. Indeed it is interesting to see that daily Bitcoin volume is currently around $250 million a day having risen by 55% since 2016. Speculation regarding ETF approval has seen volumes peak at $600 million earlier this year with many traders now willing to take a chance.
Long-term prospects
Slowly but surely the Bitcoin is becoming more recognised and more traded on a worldwide basis. While daily volumes may be minuscule compared to more recognised currencies this digital currency is starting from scratch. Traders are always looking for new opportunities and while the current rate for a Bitcoin may have pushed ahead too far too quickly, at least in the short term, many believe the long-term prospects are significant to say the least.
Will we look back on the relatively short life of Bitcoin to date and wonder why we never “filled our boots” in 2017?