Bitcoin’s value has experienced tremendous growth ever since the Chicago Mercantile Exchange (CME) announced in the third quarter of the year that they were going to introduce contracts for bitcoin futures. There was even more craze when the U.S. CFTC also gave their approval for the bitcoin future contracts. And when, the CBOE stated that they also were in approval of the bitcoin future contracts and that they had plans of introducing it unto their exchange platform…prices went through the roof. In fact, bitcoin’s value rose from just $6,200 to a whopping $19,800 within the space of just a month and half. Well of course it has dropped to about $17,400 as at the time of writing, but the point is there was an unprecedented leap in value for the crypto. Evidently, the growth was as a result of the approvals it had received from these major financial regulators; making it an accepted asset class alternative.
As Newton’s law states, every action has an opposite equal reaction. This approval has led many private investors to dive headlong into the cryptocurrency pool, as well as sparking even more institutional investors’ interest in the capability of the cryptocurrency to yield even more returns than actual stocks. If you want proof of how many private investors are rushing in for the crypto, here’s one; the Coinbase app has surpassed the likes of Snapchat and Instagram and Facebook to become the most downloaded app on Apple’s App Store.
This is definitely good news for all people who own bitcoins, ceteris paribus. However, most owners of altcoins also seem to be well positioned to benefit even the more – taking a piggyback ride on the success of bitcoin. But then the question we should be asking is “is that really the case for them?”
What Does This Mean For Altcoins
Even though bitcoin happens to have been in the spotlight of most successful cryptocurrency of the year, 2017 has not been the year of bitcoin alone. The cryptocurrency market has had an immensely successful run in 2017. Its market cap stands at over $500 billion at the moment, having almost doubled its value it began the year with. In fact cryptocurrency became really recognized in the year 2017 as most investors begun to consider altcoins in the first quarter of the year. This recognition in way could be as a result of bitcoin’s success. Then came in the ICO wave which introduced a lot of digital currencies (in this case, tokens), as well as managing to get some bitcoin investors to invest in these new cryptos as a means to diversify their investments in the crypto market. We came to see new cryptocurrencies like Bitcoin cash after the fork in August, the same fork which caused many altcoins to greatly drop in value. But then the months of September, November, and December saw altcoins like Monero, Dash and Litecoin reach all-time highs. The CME and CBOE approval announcements did give the entire crypto market a huge upward push. Not only bitcoin benefitted, but altcoins like Litecoin, and ether attained heights like $400 and $700 respectively.
The announcements by these regulatory bodies to introduce bitcoin futures now makes bitcoin an officially recognised asset that can be “openly” invested in by all. This makes bitcoin’s investor market larger than other cryptocurrencies. This is in essence not so much good news for other cryptocurrencies. To be a lot more technical, bitcoin’s recognition could affect altcoins in a couple of ways. One of them is that bitcoin would become the dominant cryptocurrency that almost everyone will be going in for, and this would lead to even more growth for Satoshi’s creation, which would reflect in a continuing price rise. Should this happen, the other digital currencies would struggle to receive attention and this could really choke their growth and eventually even cause devaluation.
Institutional investors are restricted from investing in unregulated securities, thus bitcoin was a no go zone for them – at least publicly or directly. But now that bitcoin has been cleared by major regulatory bodies, these investors are now eligible to openly invest in the cryptocurrency. Ether and Litecoin, to mention some major altcoins, have not received the same honour and privilege that bitcoin has. This therefore limits these institutional investors like mutual funds from investing in these altcoins.
Every cloud does indeed have a silver lining. It is almost impossible to see bitcoin alone being the only future of cryptocurrencies. First of all, the popularity that digital assets are getting is continually increasing and the potential carried by these altcoins is very impressive as some market analysts even believe some these altcoins could surpass bitcoin in the near future. Bitcoin started as an outlaw and outcast but has approval by the CBOE and CME, what then stops these altcoins (especially the major ones from also gaining the same approval and recognition in the not very far future. In fact the approval of bitcoin futures is seen as many as the first step by major regulatory bodies to accepting the reality that cryptocurrencies have come to stay and that the best thing to do is to start regulating them in order cope with their existence.
Rex ETF and VanEck ETF have refiled cases to be given approval once more to start offering bitcoin ETFs. Looking at just how lucrative a digital currency could be, should an ETF be issued on it, one would hardly doubt that the opportunity to issue a broad range of such digital assets would be turned down. Even more so there are hedge funds, who are not restricted from investing in digital currencies directly, especially altcoins. In 2017 alone there have been over 70 newly established hedge funds, who all have one purpose; feed on the growing digital asset market. Altcoin markets stand the best chance of benefiting from these hedge funds when they begin to rake in more investors as these people will seek for the next big cryptocurrency to invest in.
The ICO world seems to be on a break from its fast drive from the beginning of the year, with most of the tokens that were introduced this year underperforming to a large extent. But the altcoin market has a great potential to attract many investors as it is in its infancy, rather than they going into the fast growing bitcoin space. For reasons as such, one would hardly think that the altcoin markets will not be recognised sooner or later and in view of that receive as much approval as bitcoin has.