Bitcoin has gone through many difficulties, but the greatest high it has seen so far was back in December 2017. Unfortunately, the decline led the entire market in a downward spiral, though it has steadied since then. The lowest moment in recent history has been just barely above the $3,000 mark, which is 85% down from the happier times in 2017. Experts believe that a spark is needed to pivot the crypto asset upward again, and Forbes believes that the source could be central banks.
Head of research at Blockchain, Garrick Hileman, believes that the predominant use case for Bitcoin at this point is digital gold. However, during a podcast called Crypto For Earthlings, he questioned who would be a part of this market for digital gold, adding that the accumulation of the digital asset among banks would make a big difference in the cost.
Central banks are responsible for pushing along the progress and functioning of the economies of the countries that they are in. They manage a huge amount of money, and decision to build up reserves of Bitcoin and altcoins, especially considering the finite supply, would create a whole new surplus in demand. Unfortunately, central banks have had a difficult relationship with the crypto industry, since most of them are distrustful of the potential bubbles it could create.
Since the last bull run, the crypto market has seen the departure of about $400 million in the last 14 months. Most of the investors in the market have been waiting for and expecting institutional investors to come in to the market. However, they never showed up, as multiple products geared towards these investors have fallen away.
Considering how worried consumers can be about manipulation in the market and the lack of authority, the recent developments in the regulatory atmosphere have been a positive change. Bitcoin and other cryptocurrencies respond in a great way, because investors see the asset as something safer and more legitimate. Regulators in the market have not tried to ban the industry, which used to be a fear. By creating an environment that cryptocurrencies are welcome in, institutional investors do not have as great of a threat that the crypto rug will be pulled out from underneath them.
At the time of writing, Bitcoin is trading below the $4,000 threshold at $3,972.59, even though so much of the market was confident it would stay above the market. This follows a trend that that Bitcoin and many other coins have seen in the last week. Perhaps the theory from Forbes is right, but the crypto investors would probably prefer this bounce back up sooner, rather than later.