According to one crypto trader, bitcoin is climbing the ladder to $50,000. One critical event in the space could open up the floodgates to institutional money. This would make bitcoin a potential six-figure asset.
The approval of an ETF will be the most significant single event in bitcoin’s history. It would allow a large pool of money, including pension funds, endowments and sovereign wealth funds, to gain entry to the ETF. They will come in when an ETF is available,’ Scott Melker (crypto trader and host of The Wolf Of All Streets podcast) told Kitco News. That would be the catalyst to institutional adoption of bitcoin. They need a regulated asset they can trust, that has been vetted by their risk management and the SEC.
Melker believes regulation of the crypto space is inevitable as U.S Securities and Exchange Commission (SEC), Chairman Gary Gensler, calls for Congress to provide additional authority and resources in order to supervise cryptocurrencies.
MIT’s Gary Gensler was a blockchain teacher. He is a big proponent for bitcoin. Melker stated that it was nice to have someone who is familiar with the asset.
Gensler should be responsible for regulating crypto trading. This would encourage more people to invest in the space.
He stated that ‘Reasonable regulation to protect consumers is a positive thing’ and that it would likely open up the door for a lot institutional money that’s waiting to be given the green light to enter the market.
The crypto world is abuzz this week as bitcoin and ethereum have made significant gains above $40,000, and $3,000 respectively. And the rally happened despite the negative news cycle filled with regulation threats and a crypto heist.
Melker described the crypto rally as price catching up with the real value.
“It’s a function that the price actually catching-up to the value. The major liquidation in leveraged traders caused prices to fall much more than expected. We saw nearly $10 billion of liquidation after bitcoin fell from $60,000 to $50,000. One million retail accounts were closed. Similar activity was seen from $40,000 to $35,000 He said that he didn’t believe that this was bitcoin’s fair value. “Now, we are seeing institutional interest returning in and taking advantage the dip prices.
The U.S. infrastructure bill has been the most prominent advertisement for Bitcoin in history
There have been heated discussions within the crypto community about the U.S. infrastructure bill, and the provision to partially finance the $1 trillion bill through tax reporting requirements for cryptocurrency brokers.
Melker stated that aside from the debate about clarifying the definition for a broker, the infrastructure bill was the most prominent advertisement for Bitcoin in history.
“We are talking about printing more than a trillion dollars from thin air to pay an infrastructure bill that has absolutely no connection to cryptocurrency. The bill was frozen for three to four days because of one cryptocurrency provision. We had the whole world talking about Bitcoin and the crypto industry. He described the irony.
Melker doesn’t see the crypto tax provision as having a negative impact on bitcoin at the end.
“It’s increasing awareness, which is likely actually causing more people buy than sell. It’s also the only line in this bill that is not related to cryptocurrency. It must still pass the House. It still needs to be approved by the House. This would not happen until 2023. He said that there was a long time horizon for any activity in this area.
Forecast for price
Melker projects new all-time highs in bitcoin and ethereum before the end of the year.
“I believe this correction is over and that we will see new all time highs before the end of the calendar year. It would not surprise me if bitcoin trading reaches six figures in the next six to twelve months. He also mentioned that ethereum could push towards $10,000 at the same time.
Melker sees long-term bitcoin as a seven figure asset, and ethereum at $20,000 to $30,000 as a minimum.
The crypto market was consolidating following recent gains. Bitcoin traded at $44,240, down 4.5% on the day. Ethereum traded at $3,044, up 5.73%.
Melker’s estimations include the assumption that bitcoin will be mainstream. Melker claims that this is already happening because of the COVID-19 epidemic.
“Most people don’t know what money is, or they have never asked it. They take it for granted that money exists. It is a medium of exchange. Melker said that this has changed somewhat in the past year and a quarter with COVID, monetary policy, and everyone watching central banks printing money incessantly while stocks rise and people in real life suffer and don’t have jobs.
He said that there has been a great awakening in central banks printing huge amounts of money.
“And bitcoin is clearly a hedge against that.” He stated that bitcoin has “really solidified its position as digital gold” or a store-of-value. Bitcoin is for saving and dollars are for spending. Bitcoin is a savings account that will appreciate over the long-term and can be used to hedge against inflation and money printing (which we know will happen).
Melker believes that big institutional players will embrace bitcoin and leave behind gold, particularly when ETFs are approved in the U.S.
He said that bitcoin could be turned into gold if there was regulation and then an ETF. “Institutional investors, such as retirement funds, can be huge machines that take time to change and turn. As the price falls, gold’s luster is likely to diminish. They’ll also look to bitcoin as their market cap decreases.