Bitcoin is big news right now with it reaching over $40,000 for the first time in what has been the best year so far for the cryptocurrency. It has also been receiving more attention from institutional investors. A survey by Fidelity found that over 35% of institutional investors own cryptocurrency. That is a clear sign that the asset is becoming more legitimized, but is it ready to hit the mainstream yet?
Obstacles Hindering Cryptocurrencies Rise to the Mainstream
There are still many question marks about crypto, and many reasons why a certain class of investor is still reluctant to invest. But one of the biggest is the inability to present a real use case for day-to-day transactions. While cryptocurrency is widely accepted in certain sectors, it isn’t for average purchases, and many reasons explain that.
For one, Bitcoin remains the most, and sometimes the only cryptocurrency vendors know. Bitcoin is notorious for having slow transaction speeds and high fees. But another issue with Bitcoin is volatility. Vendors don’t want to have to constantly monitor the price of Bitcoin to readjust their prices and reassess their reserves.
Crypto Can be a Scary Asset
This volatility along with the complexity of crypto in general can make them a very intimidating asset to some. While some people will have no problem embarking without much knowledge, many will simply refuse to invest in something they don’t understand.
The barrier of entry is much lower now, however. There used to be a very small number of exchanges and many had users jumping through all sorts of hoops to be able to exchange fiat for cryptocurrency. It’s very important to choose a reputable exchange as there have been stories of exchanges going belly up and the coins disappearing. For this reason, more regulation in the market should be welcomed.
The Potential for Crypto
Where crypto could shine, however, is as a store of value. Besides Bitcoin, many promising projects could be great for someone who wants an asset that won’t be as affected by financial turmoil and could be a go-to on a rainy day.
Bitcoin has been able to outperform gold and silver during the recent pandemic, which could show that it’s going in that direction. We might see some corrections before the price stabilizes, which could give us a new baseline price. We also need to wait until all the weak hands have been purged and there’s a critical mass of holders supporting the value of Bitcoin.
There’s also the possibility that one of the better cryptos out there for transactions will start taking off, such as Litecoin or Monero. Bitcoin’s popularity has a windfall effect on all crypto, which could allow one to break out in the near future.
As is the case with pretty much everything when it comes to crypto, it’s really difficult to tell what the future holds. However, we can certainly say that cryptocurrencies are more well-known than ever, and should continue to rise in popularity at least among a certain class of investors.