The bitcoin bust looks to be over – for now
Bitcoin's mini-bear-market may have bottomed out.
Is the bitcoin bust over? The cryptocurrency has tumbled 37% since hitting an all-time high in mid-April. Yet the mini-bear-market may have bottomed out. At the time of writing bitcoin was trading just below $40,000, having gained more than 8% since the start of the month.
Sentiment towards bitcoin has improved on positive regulatory news, says Anthony Cuthbertson in The Independent. The Basel Committee, the global banking regulator, last week “formally recognised” the digital currency as an asset class. That paves the way for banks to hold crypto-assets. This marks “another major milestone” for the recognition of cryptocurrencies in “the world of traditional finance”. A day earlier the central American nation of El Salvador became the first in the world to make bitcoin legal tender. Elon Musk also had a hand in the latest bitcoin bounce, says Barbara Kollmeyer for Barron’s. The Tesla CEO confirmed that the company has only sold 10% of its bitcoin holdings, despite refusing to accept payments in bitcoin because of environmental concerns about its enormous energy impact. Bitcoin is thought to consume more electricity than the entire nation of Kazakhstan and not far short of “what is used by the Netherlands”.
Institutional adoption is gathering pace, says Laurence Fletcher in the Financial Times. A survey of hedge-fund managers by Intertrust Group finds that they expect “to hold an average of 7.2% of their assets in cryptocurrencies in five years’ time”, implying “$312bn of assets in cryptos”, according to Intertrust’s calculations. Current holdings are unknown but more institutional money is entering the market. The total market capitalisation of all cryptocurrencies is now about $1.7trn, equivalent to the size of Amazon.