Although Bitcoin price and virtually all altcoins dropped during the course of 2018, an optimistic review coming from SFOX, a cryptocurrency prime dealer for large-scale investors, reveals that the market also became more stable this year, after Wall Street companies joined the game.
Price fluctuations raise questions and fears, and when large amounts of money are involved, skepticism is probably the safest position. The value of Bitcoin 00 used to record oscillations of more than 10% in the course of a week before this year. Furthermore, the price of some coins used to vary by more than 4.5% across exchanges.
While these may lure individual investors, these shifts prevented mainstream adoption as they had an opposite effect on the rest of the population, who regarded cryptocurrencies with mistrust.
2018 – a step up (not down) for cryptocurrencies
However, 2018 reveals a slightly different story, according to an interview conducted by Business Insider with the head of growth at SFOX, Danny Kim. The blockchain and cryptocurrency industry progressed on multiple dimensions.
First and foremost, the prices of digital assets are significantly more stable across trading platforms, with differences of 0.1% or less. As a consequence, this year has seen many trading firms, asset management funds, and even banking institutions join the market.
“Some HFT firms have been trading since crypto 2014, but have limited themselves because the infrastructure wasn’t there,” Danny Kim affirmed. But now that cryptocurrency exchanges employed new strategies to control price inconsistencies (e.g. FIX connections and colocation of trading computers and matching engines), major names such as Goldman Sachs and ICE joined the party, pulling in Starbucks into the mix as well.
Regulations pave the way for mainstream adoption
At the same time, this year has also seen numerous attempts to regulate cryptocurrencies from national governments. And yes, the new legislation did shake the market a little bit, but keep in mind that regulation is synonymous with “legitimization.”
While the seemingly endless checks, bans, and overall turmoil tend to unsettle the market, they are also the “necessary evils” that confer cryptocurrencies dependability on the long term. Doubt it? Then take a look at Japan, whose most important bank, Mitsubishi UFJ Financial Group, has just launched the MUFG coin for daily purchases, following the implementation of new cryptocurrency legislation earlier this year.
The future: more stabilization, more widespread adoption
The next step for cryptocurrencies is a more reliable ecosystem where price fluctuations over short periods of time are also dealt with – which, according to Danny Kim (SFOX) is on the way. “As this trend continues, the stabilizing effects of institutional investment will extend beyond price spreads, and on to price fluctuations,” he pointed out.
Kim concluded that Bitcoin 00 might become a stable coin itself, which will probably fulfill Satoshi Nakamoto’s initial objective.
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