Bitcoin, currently ranked #1 by market cap, is up 5.11% over the past 24 hours. BTC has a market cap of $115.08B with a 24 hour volume of $4.94B.
Bitcoin is up 5.11% over the past 24 hours.
Noah Smith, an Assistant Professor of finance at Stony Brook University and an op-ed contributor at Bloomberg, crafted a compelling forecast for Bitcoin’s future. Mr. Smith presents three possible outcomes for Bitcoin’s adoption and proliferation: Bitcoin Triumph, Bitcoin as Gold, or Bitcoin Bust.
His argument is simple. Like gold, Bitcoin is a finite resource. Only 21 million Bitcoin will ever be produced, so it’s a deflationary asset that benefits from relative scarcity.
Moreover, Bitcoin is an asset with a high expected return, and these assets tend to be more volatile.
Most importantly, Bitcoin is becoming increasingly integrated into the financial system. Bitcoin futures are already available at CME, Cboe, and Goldman Sachs, and rumors of an impending Bitcoin ETF are picking up steam. Therefore, Mr. Smith writes,
“So my prediction is that Bitcoin will stick around, experiencing repeated bubbles and busts, but slowly gaining in value. That is why I personally still own some Bitcoin.”
Despite Bitcoin’s 2018 price slump, the dominant cryptocurrency’s hash rate continues to surge at an astonishing pace. Although the value of Bitcoin has decreased by 53% since January 1st, 2018, the hash rate increased 155% in the same time period – growing from 15.04 Eh/s to 38.43 Eh/s.
The continued growth in hash power demonstrates a strong, continued belief in Bitcoin by miners worldwide and may foreshadow a hidden bullish trend.
There are two possible explanations for Bitcoin’s rising hash rate: increase in Bitcoin’s value and the upcoming “halvening.”
At Bitcoin’s peak, a single block was worth almost a quarter million dollars and miners may view the current market as a way to accumulate more Bitcoin at lower prices.
The upcoming Bitcoin “halvening,” estimated to occur around May 25, 2020, will decrease the block reward from 12.5 BTC per block to 6.25 per block – meaning miners may be trying to accumulate as much Bitcoin possible before difficulty further increases and rewards decrease.
The price of BTC at the time of the last two halvenings was $660 and $12 in 2016 and 2012, respectively.
CBOE Seeks SEC Approval for Bitcoin ETF
On June 26, 2018, the SEC received an application from CBOE Futures Exchange to launch the world’s first Bitcoin ETF.
One of the first to launch Bitcoin futures, CBOE Global Markets has partnered with Van Eyck Investment and SolidX to introduce a Bitcoin ETF to global markets.
The CBOE proposal outlines offering clients the buying and selling of SolidX shares, which are currently valued at approximately 25 bitcoin.
If approved, accredited investors will be able to trade a Bitcoin ETF in the form of baskets of 5 SolidX shares (~100 bitcoin) on the CBOE exchange:
“The Trust will issue and redeem “Baskets”, each equal to a block of 5 Shares, only to “Authorized Participants.” The size of a Basket is subject to change.”
Whether this application will align with the SEC’s proposal to alleviate ETF processes and make its way to global markets is yet to be revealed. If approved, Bitcoin ETFs could be available for trading in the first quarter of 2019.