Back in mid-September, when Bitcoin’s value fell to a ‘mere’ $1,200 thanks to the Chinese crackdown, it looked as if Bitcoin’s dark-web past was coming back to haunt it. There’s no getting round the fact that many cryptocurrencies originally grew in value because of their use buying on the dark web. Larry Fink, CEO of BlackRock, called bitcoin an “index of money laundering.” And Jamie Dimon, CEO of JPMorgan said in September: ‘If you were a drug dealer, a murderer, stuff like that, you are better off doing it in bitcoin than U.S. dollars,”
But then something happened to reverse Bitcoin’s declining fortunes. In October rumours that Amazon would finally relent and accept Bitcoin, perhaps making an announcement in their October 26 Q3 results meeting, helped drive up the value of a Bitcoin right back up, to a then record $5,800. The speculation was fueled by a global petition on Change.org, urging ‘Amazon.com should accept Bitcoin and Litecoin cryptocurrency as payment methods ASAP’.
Investors such as James Altucher, the American hedge fund manager and venture capitalist, stated: “I’m certain that Amazon will accept Bitcoin. They have no choice. And this will be the tipping point that will create massive generational wealth unlike we’ve ever seen before.”
But why would mere rumours that Amazon was about to accept the cryptocurrency help turn around its value? We all know most Bitcoin owners are certainly not actually spending their digital currency today, whether on drugs or household appliances! The majority see it as an investment. As I mentioned in a Daily Express article early in November: the more mainstream a digital currency becomes; the more it will gain in value. With the value of a Bitcoin soaring to over $7,000 it’s not hard to see why.
The basic truth is Bitcoin investors are yearning for respectability and for more retailers to accept the currency. Why? Not to splurge their hard-earned satoshis on Kindles and Wii Switches, that’s for sure. No, the reason is that, with a bigger user base, the price of Bitcoin will both rise and become more resilient.
And if we accept the fact that digital currencies such as Bitcoins are more focused on investment than coinage, then the latest rise in value to $7,000+ is only to be expected.
If the mere rumours of Amazon adopting Bitcoin were enough to give it such a boost, imagine if it actually does? It would send a signal of legitimacy that would broaden the user base still further, encouraging new investors. A virtuous circle.
And not only is Bitcoin smartening its image to become a part of the global e-commerce network, it is also preparing to join the Wall Street jet set. The US-based exchange CME is set to introduce Bitcoin futures contracts this quarter, subject to regulatory approval.
And the reason that announcement has so boosted Bitcoin’s value is that the introduction of such a product could bring more institutional investors into the market. And that will certainly boost the price yet further.
Just look at how respectable Bitcoin is prepared to behave to boost value. It’s prepared to go along with CME’s Leo Melamed’s announcement that ‘We will regulate, make bitcoin not wild, nor wilder. We’ll tame it into a regular type instrument of trade with rules.’
Respectable institutional investors are becoming attracted to a currency that is outside any national regulation or interference: and the value of the existing Bitcoins will rise as its respectability rises. That’s why cryptocurrencies are ditching their long hair and weed, and going mainstream.
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