“Wall Street Won’t Save Bitcoin” .. but does “Crypto” Need Wall Street’s Financial Saving?
The price of bitcoin has plummeted since the start of 2018. As Wall Street gets more involved with bitcoin, however, many people believe the financialization of crypto will save the industry.
That’s not the case according to one financial analyst. In a report on Forbes, contributor Peter Tchir writes that, “Wall Street Won’t Save Bitcoin.”
You don’t have to look far to find evidence of Wall Street giants getting involved with crypto. Goldman Sachs, for example, is preparing to launch crypto-based products and has an entire crypto research division. Bitcoin futures contracts are traded in active, regulated markets every day. Meanwhile, a bitcoin ETF could be approved by the SEC within the next few months.
Yes, Wall Street is increasingly getting involved with bitcoin – but clearly, Peter Tchir doesn’t believe it’s enough to save bitcoin.
Tchir’s argument rests on the idea that Wall Street is hesitant to get involved in risky financial products. Tchir appears to be referencing the report from earlier this week that showed Goldman Sachs is shutting down its crypto department. As we reported yesterday, that’s not the case: the CFO of Goldman Sachs confirmed that the company was still preparing to get involved with crypto in the near future.
According to Tchir, however, Wall Street firms will hesitate to get involved in any risky, uncertain industry:
“But now, after LIBOR and other scandals rocked many financial firms (and in some cases led to large fines), I would expect Wall Street to be very cautious about new products. That is especially true when interest seems to be waning and the SEC keeps coming out against ETFs. Not that the SEC and the ETF rulings directly impact any firm's decision to trade crypto, but it doesn't help.”
To say the least, Tchir clearly isn’t a bitcoin bull.
Bitcoin “Needs to Stand On Its Own Two Feet”
Tchir also makes another interesting point: if a product is depending on Wall Street to survive, then it probably doesn’t deserve to survive in the first place. Bitcoin needs to prove it can stand on its own two feet to prove its value:
“…this brings us back to a long running theme – Bitcoin needs to stand on its own two feet and not rely so heavily on the new adoption rate to prove its worth.”
Tchir isn’t necessarily anti-bitcoin. Instead, he wants to believe in the future of bitcoin – but he’s struggling to do so amidst today’s bear market:
“I want to get back on the bitcoin bandwagon, but I can't. In fact, rather than seeing more people being swayed to invest in the space, I run into people are getting further away from dabbling in crypto.”
Tchir admits that crypto transactions are rising and that the technology continues to grow. These are undoubtedly positive signs. Despite the growth, however, Tchir believes that this selling trend will continue:
“I suspect this latest wave of selling, just after the bulls became very vocal, has more room to run. We are running out of excuses to buy bitcoin for near-term adopters and crypto does not seem to be convincing serious (new) investors that it can live up to the hype.”
Ultimately, it’s not totally clear what Tchir is talking about.
He admits that the technology is growing and that the use cases for crypto continue to expand. Nevertheless, he claims that bitcoin is doomed because “near-term adopters” – people who may not believe in the technology to begin with – are exiting the space.
Obviously, price isn’t everything when it comes to bitcoin. Yes, we’re in the midst of a bear market, but the price of bitcoin has still steadily risen over time, if you ignore the insane hype-fueled bull run that took place at the end of 2017.
It’s also important to note that bitcoin has stood on its own without the need for Wall Street. Bitcoin was launched in January 2009. Since then, the network has grown from a niche tech toy for nerds into a global financial network capable of securely processing millions of dollars of transactions per day. Bitcoin has done all of this without Wall Street – and it’s created an entire industry of cryptocurrencies along with it.
Sure, bitcoin doesn’t need Wall Street. But if bitcoin continues growing, then Wall Street will eventually need bitcoin.