Analysts: Bitcoin Won't Replace Cash Anytime Soon
The news regarding PayPal’s acceptance of bitcoin and cryptocurrencies is becoming the big news of the year. Many analysts claim that this will ultimately push bitcoin into mainstream territory and give it the boost it needs. Already, the currency has shoved past the $13,000 mark and many industry experts think the currency could potentially end the year at around $14,000 – a solid piece of data given how up and down the currency has been during these past 12 months.
Bitcoin Won’t Be Mainstream Yet
And yet for many others in the industry, the news regarding PayPal, while strong, does not do enough for the world’s number one digital asset by market cap. In fact, they claim that this will not make bitcoin any more legitimate than it already is, and it will do nothing to push bitcoin further up the financial ladder. They say that bitcoin is not any closer to replacing standard fiat currencies, which is what it is designed to do, and they are certain that bitcoin isn’t going to take on this responsibility.
One of the big reasons for this is that bitcoin and other altcoins are still very volatile and vulnerable to price swings. We have seen it particularly this year, when as soon as the coronavirus hit, the world’s primary cryptocurrency fell from around $10,000 to just under $4,000 in less a month. That’s a loss of more than $6,000 in just a matter of weeks.
From there, however, the currency began to grow in price, and while things have ultimately turned around for crypto, it’s safe to say that things could just have easily fallen further. Many stores and retailers are not willing to take a chance on these coins for that reason. Granted someone comes in, buys merchandise with bitcoin and then tomorrow the price of the asset falls, the customer will still get to keep everything they have, but the store will have lost money. It’s not entirely fair to the selling party.
Darrin Peller – a managing director at Wolfe Research – comments:
Other than being used as a speculative currency, one of the biggest roadblocks [for crypto] is still the volatility of the currency and the ability to use it. The point of sale is tough.
In addition, analysts are also lagging confidence when it comes to the institutional presence that has been exhibited in the bitcoin space. While several large companies from MicroStrategy to Square have purchased vast amounts of the digital asset, they are not entirely sure this will be enough to cause other companies to jump onto the bitcoin bandwagon.
Institutions Aren’t Active Enough
Meltem Demirors – chief strategy officer of Coin Shares – explained in a recent interview:
The recent news regarding large corporations investing in BTC is helpful for sentiment and PR, but it is not something that most traditional investors will assign much value to.
Source: Read Full Article