The True Value of Bitcoin and the Crypto MarketOctober 17, 2017
There is a new and strong push by the mainstream domain to get some kind of a bearing on the digital currencies which has lasted ever since the big crash of 2013. Now, even larger entities are entering the fold with different reasoning but more or less the same goal – assess the potential and then device the methods that can be used to capitalize off of it.
The big investment firms have been deep in this process arguably ever since the ethereum network went online and the world got its new bitcoin rival in the terms of market cap and overall cryptocurrency use. Now, it looks like it got a whole new level with the entity like the Bank of America Merrill Lynch.
Recently, it has produced a research analysis of the digital currency ecosystem and also provided its outlook on its meaning and relevance to the financial domain. The research results are very interesting because they provide an insight into a world that is often assessed through biased perspectives. Here are the main conclusions of the same report and the broader picture they paint when it comes to the entire field of FinTech.
New Players in the Crypto Markets
Recent reports have shown that several large entities in the traditional financial and trading domains, like Goldman Sachs are trying to decide whether or not to establish their cryptocurrency trading desk. Now, the Merrill Lynch researchers have pointed out that this type of a move could have a wide and impacting effect on the market, especially if other financial firms decided to do the same.
Knowing the way the hyper-competitive Wall Street functions, there is little doubt that many others would follow behind, ranging from small to medium companies. Once they get established, the other giants of the industry would set up shop as well.
However, Merrill Lynch research shows that this would be a lot more complex. In their research note called “Introducing cryptocurrencies – what are they good for?” the bank tried to get into the concepts of bitcoin, but also other digital currencies like XRP and ETH.
It assessed the basics of the current market and it also tried to expand upon that by exploring the specifics of the new and emerging open blockchain networks working today. Similar to eSports and other digital ventures, their number is constantly rising.
The Future according to the Report
The report has also tried to touch upon any potential factors that will determine the shape of the market’s future and its progression. This includes different potential financial products that could be based on this technology.
In this regard, the report references that the possibility of brokerages starting to offer such services to their established range of clients would provide to be a big influence. It would impact the overall liquidity of the markets as well as the market capitalization. Of course, this would be most impacting for the big digital currencies at first.
The report also states the “coin universe” as it calls it is dynamic, volatile and innovative, where the true value of any cryptocurrency could be very hard to assess, if not downright impossible. One of the certain effects that could be seen soon is the potential of the institution-backed products, which would impact everything.
During 2017 so far, a range of companies working in the global financial market have been slowly revealing their plans for entering the cryptocurrency domain in some shape or form. These include CBOE and others who have presented their plans of taking part in this ecosystem, even though the reaction of the US regulators was not very supportive so far.
The analysis made by the Bank of America shows that the same uncertainty will add to the volatility of the cryptocurrency markets in the months to come. In the same period, any number of these institutions can push forth their project or cancel them if they fail to see any potential for growth.
At the same time, the most likely option is that many would simply employ the wait and see approach. In this case, none would stop the research of the blockchain initiatives, but just push back their implementation, even as pilot ventures.
Precisely because of this, Bank of America’s report decided not to suggest anything to potential investors into this domain. Instead, it ended with the final thought that the present market is far too unpredictable and that the identified impacting factors are too vague to make any clear recommendation. This way, the investors as far as Bank of America is concerned, are on their own with the cryptocurrencies.
A Realistic Look Inside
The cryptocurrency field can often seem like an unknown territory that is familiar only to the veteran investors and developers being active directly in it. Others, including users who utilize cryptocurrency daily for things like bitcoin betting, online purchases, and much more similar things, appear to be only slightly more informed than the general public.
While it is hard to gauge who knows what and in what way, there is a certainty that simplified and straightforward outside assessments of the global cryptocurrency markets are not frequent. This report from Bank of America, however, has managed to do exactly this.
Using their in-depth knowledge of the traditional trading and finance domains, the bank’s experts provided an unbiased assessment of how the cryptomarkets look to them. All that is listed inside of the report cannot be argued when it comes to its validity or general tone. Thanks to this, the report is neither damning nor supportive – it just states the reality as the analysts perceive it.
Right now, there is no better advice for the potential investors than explaining to them that no one has this fully figured out. While there is definitely a boom when it comes to the value of digital currencies and their market cap, experts from all corners are far from having working models on their activity or behavior. Saying anything else simply would not be true and the report did a great job of transmitting this very undeniable truth.