Bitcoin Might Not Displace Fiat Currencies Soon but Nothing Comes Close as a Store of Value

Bitcoin seems to be the proverbial cat with nine lives as it continues to survive the onslaught of governments, regulators and traditional financial institutions. The digital currency lost some ground in the market after negative comments from the CEO of JP Morgan, Jamie Dimon who referred to the digital currency as a “fraud”. Dimon also said that he would sack any staff of his bank that trades in the currency, Yet, Bitcoin didn’t waste time in getting up from the backlash and it appears to be rallying up towards previous highs.

In addition to Dimon’s negativity, China initiated some tough measures against Initial coin Offerings (ICOs) which in turn affected the general cryptocurrency market negatively. Yet, the digital currency market responded in an amazing level of resilience as Bitcoin and Ethereum booked an amazing bounce in the following sessions. This piece looks at two reasons cryptocurrencies are here to stay despite criticism and cynicism from traditional financial institutions.

Cryptocurrency scores more than $3 billion a day in trading volume

Analysts believe that cryptocurrencies are here to stay and one of the best indicators of the market trend is the consistent rise in trading volumes. Digital currency trading is surging higher daily because investors are confident that cryptocurrency is the future of money.

The trading volume for Bitcoin is currently more than $3 billion daily, and Bitcoin’s trading volume might soon surpass the trading volume of Apple Inc. (NASDAQ:  AAPL ), which has a $4 billion daily trading volume.  For what it’s worth, Apple’s stock is the biggest stock traded in the world by daily trading volume.

Jens Nordvig, CEO at Exante Data observes that cryptocurrency might soon become the mainstay for investors who had hitherto been wary of putting serious money in cryptocurrencies. In his words, “cryptocurrency trading volume is now more than of $3bn/day on average, and will likely soon surpass that of the world’s most liquid stock: Apple ($4bn/day)”. He also noted the volume of trading taking place between the two largest digital currencies, Ethereum and Bitcoin in relation to trading volume for traditional fiat currencies as increased eight times this year.

2 Reasons Cryptocurrencies will continue to survive attacks

The cryptocurrency industry is constantly evolving

The first reason investors might want to drop their cynicism and open up to the latent potential in Bitcoin is that the cryptocurrency industry is constantly evolving. When Bitcoin debuted, regulators were quick to point that its anonymity made it a tool of trade for illegal activities – case in point, Silk Road. However, in the last couple of years, Bitcoin hasn’t fully lost its anonymity but some evolution in the protocol now makes it easy for a determined investigator to trace Bitcoin transactions.

Many investors are cynical about investing in cryptocurrencies because of past events on how hackers have stolen millions of dollars in Bitcoin. The fact that cryptocurrency exchanges lacked insurance or deposit guarantees also meant that many investors were left out cold without respite when such hacks happen.

Interestingly, some innovators with deep backgrounds in finance and technology are setting up shop to assuage the doubts on investors by creating a cryptocurrency exchange that meets the yearnings of traditional investors. Legolas provides cryptocurrency investors with a guaranteed wallet that preclude risk of theft and loss with guarantees on deposits by a real life bank.  The exchange is also built on a transparent protocol to provide a fair and honest trading environment that eliminates the chances for market manipulation and front running.

Cryptocurrency investors can also join the pre-sale of the LGO token, which will be used as payment for fee orders and other paid service on the cryptocurrency exchange. Hence, investors can reasonably expect an increase in inflows from Wall Street to cryptocurrencies once the major problems that keep institutional investors from cryptocurrencies are solved.

Undeniable proof of potential in cryptocurrencies

The second reason it might not be smart to stay on the sidelines of the cryptocurrency train is that there’s an undeniable proof of potential in cryptocurrencies. In the year-to-date period, Ethereum has rewarded investors with more than 2778.89% gains from $10.28 on January 2 to $295.95 on September 25 as seen in the chart below.

More interesting is the fact that Ethereum seems to have built a support and resistance trend in the $280 to $350 range. Ethereum has declined both times it touched the $350 resistance point in the last three months, but it has gone flat once and rose the second time it touched the $280 support trend line.

Bitcoin investors also have been treated to a steady 404.4% gains from $910.29 on January 2 to $4,800.03 on October 11 as seen in the chart above. Of course, Bitcoin has recorded some heartbreaking declines as seen in the chart; yet, you can’t deny the fact that the predominant trend in the cryptocurrency is northbound.

Interestingly, Bitcoin has delivered particularly impressive performance relative to stocks in the year-to-date period as seen in the chart above. The NYSE Bitcoin Index has delivered 404.04% in the year-to-date period. In contrast, the S&P 500 is up 13.94%, the NASDAQ is up 22.45%, and the Dow is up 15.59% in the same period.

Final words…

Nobody can guarantee that any digital currency will thrive as an alternative to any of the major traditional currencies. Neither can we state in absolute terms that cryptocurrencies will continue to outperform stocks.  However, the fact that cryptocurrencies keep  showing resilience to survive attacks, hate speeches and clampdowns suggests that cryptocurrencies will stay around for a long time. Bitcoin might not reach $100,000; but for now, there’s no other asset that lay claims to being a comparable store of value of growth vehicle on Wall Street.