Last year, Bitcoin’s price explosion brought cryptocurrency into the public eye and placed it squarely on the lips of investors around the world.
It was a trendy new investment – attracting soccer moms and millennials alike – and the rapidly climbing prices caused many people to buy their first Bitcoin around the holiday season.
Experts tried to rationalize why Bitcoin rose 1,300% over the course of 2017, saying that it was caused by wild speculation, a media blitz of crypto coverage, or even devious price manipulators.
Those certainly may have been contributors, but ultimately Bitcoin’s meteoric rise was caused by one thing:
New money entering the market.
Cryptocurrencies, while still a niche investment, were extremely niche in early 2017. As it became more popular and investors bought their first digital coins, it gained a head of steam that quickly grew into an unstoppable force.
People who knew nothing about blockchain technology or cryptography back at the start of 2017 became experts by October, consuming every bit of information and analysis available in hopes of becoming the next overnight crypto-millionaire.
These new investors were the ones responsible for driving prices sky-high in such a short amount of time.
Since the start of 2018, Bitcoin has fallen off significantly – bottoming out three times at around $6,000, with the most recent occurrence in late June.
However, after a couple of positive weeks, Bitcoin (and the rest of the market) seem to be eyeing a recovery – but will it be anything like late last year?
Can Bitcoin surge to another new all-time high?
In my opinion, yes, it is absolutely possible – but only if new money floods the market again like it did in 2017.
Back in late June, right around when Bitcoin bottomed out yet again before heading back up, the SEC was thinking about allowing an investment firm to create the very first Bitcoin ETF(Exchange Traded Fund).
The fund would be the result of a joint effort between investment firm VanEck and blockchain startup SolidX, with the intent to have it listed on the CBOE (Chicago Board Options Exchange) BZX Futures Exchange.
Three days ago, the CBOE formally filed an application with the SEC (Securities and Exchange Commission) for a Bitcoin ETF license, which would be the first of its kind. VanEck and SolidX have actually submitted applications for a Bitcoin ETF twice in the past, but were declined both times for various reasons.
This time, however, the SEC has released statements indicating that the approval of a Bitcoin ETF is all but guaranteed, as they are working on less-restrictive legislation that would allow new kinds of ETFs (like the Bitcoin ETF) to be created.
And when the first Bitcoin ETF does hit the market, it is going to have a profound effect – potentially shooting prices to the moon.
Bitcoin would blow past the $20,000 all-time high it set in 2017 with ease, possibly even hitting 6 figures by next year – because the creation of a Bitcoin ETF would finally allow the massive, institutional level investors to participate in crypto for the first time.
Over the last few years, cryptocurrency has done just fine with ordinary people like you and me investing in it. We’ve been limited to buying coins and tokens the old-fashioned way, storing them on wallets and trading them up and down the market.
While that works well for individual traders, it has largely kept Wall Street out of the space entirely. Institutional investors are going to need alternative instruments to invest in cryptocurrency, and up until now there haven’t been any.
But after Bitcoin peaked last year at around $20,000, investment firms took notice.
When it survived a crash back down to around $6,000 earlier this year, they became interested in it.
And when Bitcoin bounced off that low price of $6,000 for the third time, they knew that they had to take cryptocurrency seriously.
Since then, indexes have been created (which generally precede a huge bull run) and financial instruments are being developed – including swaps, options, and yes, ETFs.
When the Bitcoin ETF is approved later this year (or possibly much sooner), it will open the floodgates, piercing the veil separating Bitcoin from Wall Street – unleashing billions of dollars’ worth of new money into the market.
Remember, in 2017, the massive Bitcoin rally was caused largely by one thing – new money entering the market.
And it’s about to happen again on a exponentially larger scale with the creation of the Bitcoin ETF – the single event that could turn crypto on its head in an instant.
If you missed out on Bitcoin the first time (most people did), I’m happy to tell you that you don’t have to worry…
Because the second Bitcoin price explosion is right around the corner, and I can guarantee that if you miss it again, you’ll be kicking yourself for the rest of the year.
