The more attention Bitcoin (CCC:BTC-USD) receives from Wall Street, the worse of an investment it appears to be on Main Street. That’s because as the largest cryptocurrency becomes mainstream, it is more likely to face regulatory action. Or put another way, it’s all fun and games until the “suits” get involved.
Think I’m being hyperbolic? Then consider remarks by Ben Hunt, chief investment officer at Second Foundation Partners. Hunt expressed his belief that Bitcoin in the mainstream dilutes its original use case.
Hunt’s views were expounded upon in a recent article by Samuel Wan on NewsBTC when he wrote “The leading cryptocurrency was founded on the principles of being permissionless and censorship-resistant. In short, a way to stick it to the establishment.”
Wan went on to write that Hunt views that Bitcoin may be facing an identity crisis as Wall Street begins to use Bitcoin to serve its own ends. Perhaps the most alarming of Hunt’s comments was thus:
“… what made Bitcoin special in the first place is nearly lost, and what remains is a false and constructed narrative that exists in service to Wall Street and Washington rather than in resistance.”
Cryptocurrency in general has always faced a conflict between institutional investors and the crypto evangelists. The latter point to the blockchain technology that underpins most cryptos. This is the one thing that makes Bitcoin and other altcoins, such as Ethereum (CCC:ETH-USD), so valuable. Bitcoin also offers investors the benefit of scarcity as only a finite number of Bitcoin will ever be created.
This scarcity rationale was a perfect counterpoint to the lack of fiscal discipline by our government. However, the volatility of cryptocurrency has largely been the reason it failed to get mainstream acceptance. Now it seems that might be changing. Traders just want to make money. And cryptocurrency is an asset class that can provide that.
Mark Hake has an insightful take on why Bitcoin could be trading at $100,000 by the end of the year. I’m not disagreeing. All I’m saying is it may come with strings attached.
A Social Dilemma
Bitcoin bulls and bears engage in a circular debate that is important, but irritating. The reason is that neither side can “prove” their case. So I’ll add my own thoughts to the argument.
The fact that more institutional investors are becoming attracted to investors is like when parents started to go on Facebook (NASDAQ:FB). Just like that, Facebook became the social media space that teenagers and young adults sought, and still seek, to avoid.
The argument was, if Facebook is a platform that “old people” engage with than it was too establishment for them. See ya Boomers!
Having said that, there is no evidence of a mass exodus right now. Despite its recent drop, Bitcoin is still up about 94% for the year at the time of this writing. And no less than Mark…