Summary
- The institutional outlook for BTC remains bullish despite recent market instabilities.
- Regulatory pressure around the use of digital currencies in crime and terrorism could lead to tighter restrictions and lower demand.
Bitcoin added 3.8% to its value in 24 hours to trade at $58,191 at the time of writing. BTC prices seem to be on a rebound after a tumultuous ten days that triggered talk of a possible market correction.
At today’s price, Bitcoin prices had gained 2% over the mark seven days ago. Institutional confidence in BTC seems well established, and barring adverse action from regulatory authorities, the cryptocurrency will likely keep moving upwards.
Institutional adoption of BTC
The institutional outlook for BTC remains positive, even amid a market slowdown.
Dawn Fitzpatrick, the Chief Investment Officer of Soros Fund Management, has recently stated that the firm has invested much more in digital currencies. However, in what could signal a cautious approach, she claimed that the looming initiation of Central Bank Digital Currencies (CBDCs) could negatively impact BTC in the short run.
Elsewhere, Microsoft has recently launched an identity platform powered by Bitcoin. The platform can validate an individual’s identity without depending on centralized institutions or other verifiers using the Bitcoin network. The platform can be used to access resources securely, validate and sign certifications.
To meet the growing demand for digital assets, Robinhood, a trading app, recently announced plans to add more members of staff to its department of digital currencies. The company wants to increase its digital asset team in anticipation of new adoptions of digital assets.
In a classical case of negative feedback from government authorities, recently, the governor of the central bank of Norway, Oystein Olsen, stated that he does not foresee digital currencies upstaging fiat currencies. He particularly pointed out Bitcoin, stating that it is very expensive, lacks stability, and utilizes a lot of resources.
As authorities continue to crack the whip on Bitcoin fraud, more people are losing their money to crypto-fraud. In one of the high-value cases, Control-Finance owner Benjamin Reynolds was recently charged with a fine of over $500 million. This is after he was accused by Commodity Futures Trading Commission (CFTC) of using email, social media, and a website to irregularly acquire nearly 22,200 Bitcoin coins worth more than $140 million.
Similarly, the authorities in Malaysia are after an individual who has been accused of masterminding a $2million loss to Tenaga Nasional Berhad, a utility company. The Bitcoin miner has been accused of orchestrating the theft of electricity from the company, which was used in mining Bitcoin.
The chief of the Bank of International Settlements, Agustin Carstens, recently stated that digital currencies are being used to circumvent regulations. He has also called for the tightening of laws to prevent digital currencies from being used to launder money and sponsor terrorist activities.
Sustained regulatory pressure is an existential threat to BTC price growth. Unfriendly regulations against BTC may slow down institutional adoption of the digital asset. This may consequently reduce demand and adversely affect prices.
Renewable energy and BTC mining
Apart from regulatory instabilities, Bitcoin has also been under pressure due to the high energy consumed in mining the asset.
The Chief Executive of Foundry, Mike Coyler, has proposed the use of renewable energy in mining BTC.
Similarly, DMG Blockchain, a digital currency firm, has recently partnered with Argo, a digital currency mining firm, to initiate a BTC mining pool that uses clean energy. The mining pool will focus on using renewable energy and will merge the hash rate of both companies that utilize hydroelectricity.
Energy efficiency in mining Bitcoin will likely attract more investment and reduce regulatory restrictions attributable to high energy consumption, such as the recent cases in Mongolia.
BTC/USD technical outlook
BTC will find the first support at $53,722 and the second support at $54,231. Bitcoin will encounter resistance at $59,263, beyond which it could retest the $60,000.
