Opinion Institutions are Buying into the Narrative of Bitcoin being Digital Gold

Institutions are Buying into the Narrative of Bitcoin being Digital Gold

December 6, 2020

Once again the winds of the famous – and in many ways, dreaded – FOMO are again sweeping over the lands of crypto. This is taking place as the token prices are on a fast rise that already claimed the record value of bitcoin token recently. While the same number was surpassed by a minimal margin, there is no denying that bitcoin managed to overtake its old record from 2017. For many, especially traditional market experts, this is something that defies belief. For them and other total cryptocurrency skeptics, this is simply something that is not in the realm of possibility. However, as often when it comes to digital domains like esports and social media, the old ruleset apparently cannot be applied always, and sometimes, it can be tossed out of the window.

Now, the crypto market looks like it is positioning itself into another record-breaking attempt, as the recent price pullback did not take much from the overall growth that occurred in November 2020. At the same time, institutions are apparently pushing their funds into the crypto domain faster than ever before, with some big companies deciding to go this route for the first time, despite the otherwise incredibly bad and unstable year. All of this is showing the crypto experts that institutions are now perceiving more or less bitcoin in particular as digital gold. That, however beneficial to the price and network capitalization, does pose a range of issues and potential drawbacks for the wider crypto domain.

Institutional Betting

There is no longer any doubt that institutions really are putting a lot of money into cryptocurrencies. More precisely, that money is being funneled out into bitcoin in particular. To major businesses, this network clearly offers the best prospect of handling a massive investment that is coming from a national or international company. It also showcases that businesses are no longer worried about the prospect of cryptocurrency networks all of the sudden becoming defunct.

That chapter appears to be over as no longer any credible source in the traditional finance community is claiming that bitcoin is something like a scam. Now businesses are ready to take their money and basically bet it on bitcoin rising in price over a protracted period of time. This is why the current rise in price has not yet plummeted or shows any fatigue when it comes to the coming days and weeks. That means that the businesses are betting on bitcoin for the long ride. Regardless of how much risk that comes with, it is still an ongoing phenomenon which is only bound to catch up even more in the business community.

Ignoring the Crypto Competition

While all this cash is pouring into bitcoin, are there cryptocurrency networks also gaining in value? All of them, but nowhere near the pacing that the BTC is seeing. Instead, they are not experiencing the same boom one might expect at the moment when bitcoin just broke through its previous record for the highest price for a single BBC token. Instead, networks like ethereum did gain a lot in value but are still nowhere near their previous records. Those levels, which is 1,400 USD for one ETH token, are presently more than 50 percent down.

That means that the same betting spread that the bitcoin is seeing is simply not translating to other cryptocurrency networks. The same also applies to established alternative coins like ethereum, but also any new arrivals that are otherwise very promising in the ecosystem of altcoins. For big businesses, these are apparently not a good investment opportunity right now and that remains a big mystery for the analyst in the cryptocurrency network sphere.

Tech Advantages

The irony of this process is the fact that many alternative coins have the ability to provide so much more than the bitcoin token system. Again, ethereum is a great example. This especially applies to its decentralized finance opportunities that have been a massive success in the recent couple of years. Also, more and more financial entities are taking on the same tech for their internal mechanism. But it seems like the businesses are truly into the whole digital gold narrative.

That means that they want to have a single token in their possession that they can hold and hopefully see growth in value. These businesses are not planning to do anything with the tokens from the network they’re buying in a technological sense. Instead, these are supposed to simply store value and keep it until the moment that bitcoin reaches a huge future price. Then the selloff will begin and the businesses and institutions that are currently investing will simply walk away with a huge amount of fiat profits. That is the plan that apparently many of the companies are using while they’re investing and reaching out to the cryptocurrency domain.

Diversification and Stabilization

While there is no investment in alternative coins right now there is a huge chance that the same will take on a different form soon. After all, it is quite clear that having a diversified portfolio is something that these companies are already interested in. If there weren’t they would not be investing in bitcoin in the first place. So the next logical step is to branch out into different cryptocurrency tokens and these decisions will likely take the form of following the list of biggest tokens by market capitalization and coin price.

Thanks to that, tokens like the previously mentioned ETH, but also dash and bitcoin cash can expect to see an influx of institutional fiat. However, that process might take months to get going and at that time, the bitcoin price can go either up or down. The chances of both happening are higher than the prospect of BTC price remaining in the current 19,000 USD range. Because of that, a lot of cards need to fall just right for the altcoins to get into the same rally along with bitcoin. For now, it appears that altcoins are definitely in the backseat to this mainly bitcoin-based rise in price.