Banks can now hold cryptographic keys which means that they can store Bitcoin, Ethereum, and other assets as analysts say that this move is quite positive for the entire crypto space as we are reading more in our latest BTC news.
One commentator said that this move by the US Banks can now hold cryptographic keys that will hedge and invest in Bitcoin even with the 1% of their assets that could send the market skyrocketing. The growing number of Wall Street investors revealed they are holding Bitcoin as a hedge after looking into the macro performance as their positions are small and makeup by 1-3% of their portfolio. This could sound like a lot but analysts reminded Crypto Twitter that a few percentages pointed that it could go a long way.
According to the digital asset manager Charles Edwards, Bitcoin could double up on one condition:
“If US banks put just 1% of their assets into #Bitcoin as an investment, hedge or insurance…”
This was a theoretical scenario but Edwards said that it is not hard to see where this is going commenting on the Greyscale’s Bitcoin accumulation. The positive sentiment came as a growing number of investors believe that technicals and macroeconomics will push Bitcoin to a $20,000 level as Bloomberg commodity analyst Mike McGlone said:
“Bitcoin is mirroring the 2016 return to its previous peak. That was the last time supply was halved, and the third year after a significant peak… Fast forward four years and the second year after the almost 75% decline in 2018, Bitcoin will approach the record high of about $20,000 this year, in our view, if it follows 2016’s trend.”
Although the Bitcoin investors will embrace a move to $20,000, billions of dollars are going into BTC which will most likely double the prices. The analysis found that if investors put $1 into the Bitcoin market, the asset’s market capitalization increased by more than a dollar. This is called a “fiat amplifier” or “fiat multiplier” and it is a byproduct of the liquidity of the market. Alex Kruger commented:
Another way to look at this.
Want to buy 1,000 BTC ($3.8 million) at market on Coinbase? You need to cross the bid-ask spread. Doing so would result in approximately a 10% premium.
The larger the size invested, the higher price goes.https://t.co/fOeD8JHujr
— Alex Krüger (@krugermacro) January 3, 2019
“Invest a relatively large sum in a small asset (in $ terms), where additionally a significant fraction is not liquid (i.e. does not trade, sits off exchanges) => prices skyrocket. Fixed supply compounds the impact. Another way to look at this: Want to buy 1,000 BTC ($3.8 million) at market on Coinbase? You need to cross the bid-ask spread. Doing so would result in approximately a 10% premium.”
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