The price of Bitcoin has finally picked up since April after struggling to stay above the $6,000 mark earlier in the year. Investor confidence within the cryptocurrency market is getting on its feet as the market cap reaches $450 billion and BTC dominance drops to nearly a third of the market. There are three factors that could prompt a rally in its price capable of printing new highs, according to analysts.
Bitcoin Rally Will Feed Off Enhancements and Institutional Money, Analysts Say
As the price of Bitcoin gets closer to the $10,000 area again, a number not seen since March, analysts take note of what is needed to bring the cryptocurrency back to $20,000 and higher. Adoption as a store of value and as a medium of exchange is paramount to establish Bitcoin in the currency market. A number of changes must happen first in order to promote such adoption.
Christian Ferri, president and CEO of BlockStar, an all-in-one blockchain ecosystem for entrepreneurs and investors, told Forbes that there is a need for a scalable 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. Once this happens, more people will jump in, so a scalable infrastructure will be crucial.”
Ferri added that only protocol enhancements are capable of reducing price volatility, which in turn will improve its function as a currency.
“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.”
The inflow of institutional money could also help drive the price of Bitcoin to new record highs, but there is a number of concerns that need to be taken care of first, from security to counterparty risk and regulation. The entry of large players could cause the herd to rush in, but it would require a host of regulated exchanges dealing with cryptocurrencies.
“At this stage, institutional investors hold the key to Bitcoin’s growth. Concerns around liquidity, security, counterparty risk and custody of assets have so far prevented institutional investors from buying Bitcoin on decentralized exchanges. 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”, said CrowdfundX CEO Darren Marble.
Simpler trading through brokerage accounts could eventually take place via crypto-related exchange-traded funds (ETFs). The mainstream adoption of cryptocurrencies within the investment industry may change the paradigm and lead to new all-time highs of Bitcoin.