Big businesses are investing in bitcoin worldwide — suggesting that it will soon be normal for these conglomerates to have a healthy stack of bitcoin in the bank. What does this mean for the future of finance?
While you can say that the public banking sector, those with personal accounts, mortgages, car loans, and the everyday financial burdens that come with being an adult are absolutely the backbone of centralized banking practices. However, while they may provide the skeletal system of the financial body, big business sets trends. This is mainly because big business controls a considerable portion of the centralized global economy and wields an inordinate amount of influence over stock market trends.
So, while it’s important to give credit where credit is due, it’s unlikely that private bank account holders will ever sway the way we think about and interact with finance. This has been no more obvious than with the incidence of traders flocking towards the humble Crypto platform. While retail adoption has seen massive surges of late, and the number of retail investors continues to soar— it really wasn’t until legacy institutional interest took hold that cryptos began looking like the future of finance.
Recently, huge names in the financial industry, including JPMorgan, Visa, Tesla, and Square, have all been seen to be buying up bitcoin in great swaths. And now, other household names across the globe are following suit.
Global Business Follows Suit
From Hong Kong to Norway, huge names in national business have been scooping up at the liquidity in the Bitcoin and Ether markets, not only helping to solidify prices and give the bulls their head but also to help bring some much-needed credibility to crypto as a structure capable of supporting corporate wealth.
While arguably the most famous of all cryptos, Bitcoin, has seen incredible heights and intriguing gains this year, there was initial speculation that this could be just another bubble. However, with companies like Morgan Stanley— a globally known investment bank that operates in 42 countries and serves up tasty investment and financial advice to most anyone— becoming major players in the Bitcoin space, more and more global businesses are looking to follow suit. Which all but forces detractors who cite volatility and uncertain valuations as reasons no corporation would reasonably invest in taking a seat.
It also means that we could reasonably expect to see an end to Bitcoin's infamous volatility altogether. With more major American banking and payment systems creating infrastructure for the coin, as well as padding their own digital wallets, it’s become clear that Bitcoin may not represent the risk that it once did. As businesses like Hong Kong’s Meitu, a digital photo retouching software company, boost crypto holdings to a reported $90 million, it seems that crypto is here to stay.
But Meitu and Norway’s Aker aren’t the only institutional powerhouses that have come to drink from the crypto well of late. Names like Microstrategy, Soros Fund Management, Goldman Sachs, MasterCard, among others, have all redoubled their efforts to either own or provide on-ramps for crypto. This means that widespread adoption isn’t just in the cards, it’s already been dealt.
With big players coming to help stabilize values and shore confidence in the crypto market, the DeFi sector continues to toil away— creating better financial tools that give crypto the applications it needs to become the future of finance entirely. Crypto lending, savings accounts, and even online wallet apps that function similarly to the online banking app you already own are fundamental to a centralized banking structure that allows it to be so efficiently and ubiquitously used.
Creating the financial tools necessary to interact with cryptocurrencies in a casual way, on a daily basis, could mean that digital currencies may contend for a top spot in the financial sphere. While it’s unlikely that centralized banking practices will be phased out altogether, crypto allows for ease that these legacy structures just can’t provide. Namely? Borderless transactions through different crypto platforms and much lower fees.
These are two massive bonuses when it comes to global business. The UAE recently announced that their free trade area, KIKLABB, will begin accepting crypto payments in the form of Bitcoin, Ether, and Tether for transactions and remittances concerning trade licenses and visas, which means that even governments are getting on board. The UK has also published an agenda for negotiating a free trade agreement with the US— one that also contains references and negotiations for blockchain technologies - suggesting that two of the world’s biggest economic powerhouses could be looking to lean into the crypto space as well.
Running of the Bulls
More than just changing the landscape of global business and finance, this new sense of crypto appreciation could mean that the bull run many believed to be bright burning and short-lived could be seen to endure. With mainstream adopting grazing the tips of our fingers, crypto prices could be seen not only to stabilize but also to continue mounting. At the beginning of this year, few believed that crypto would reach the lofty heights of the expected $100 million+ valuations by 2022. Still, with prices stabilizing and more Bitcoin ETFs in the works now than ever before, the bullish speculations don't seem all that far off.
The industry had been pushing open interest in derivatives and positive perpetual swap funding rates since the end of Q4 last year. While many sat on the edge of their seats to see what would come of March’s record $6 billion in options expiring, the market barely shifted. Reactor contrarily to many investors perceived an earthquake of volatility to follow. Instead, prices stayed firmly between the $50,000- 60,000 mark they have been hovering between since February.
Investors were also happy to see another harbinger of horror quashed when the South Korean “Kimchi Premium” price gap shrank by 6%. This contrast between the value of Bitcoin’s price between South Korea and other exchanges was once thought to be a distress signal— indicating that a bubble was about to burst— instead, it ended up as a more comfortable price correction, instead of the frenzied pump and dump that many expected, which suggests that Bitcoin, as well as other cryptos and the digital finance market in its entirety, are maturing. Blossoming into adulthood and finally becoming the earnest financial option that it was absolutely built to be.
James is a writer, blogger, and professional traveller. My real-world experiences allow my articles to speak to readers on a personal level. Formality is great, but readability and engagement are the most important factors in my writing. I love helping, and that translates to articles that inspire and guide.