In a recent interview with CNBC, Paul Brody, the Global Blockchain Leader at Ernst & Young (EY), highlighted the increasing demand for cryptocurrencies, with Bitcoin at the forefront. Brody specifically pointed out that family offices, which manage the wealth of affluent families, are increasingly diversifying their portfolios with cryptocurrencies like Bitcoin. This is not surprising given the rapid rise of Bitcoin and its potential as a hedge against inflation and economic uncertainty.
While family offices are embracing cryptocurrencies, institutional investors are more cautious. Brody mentioned that these larger entities, which control over $200 trillion in assets, are waiting for regulatory clarity before committing significant resources to the crypto market. One key regulatory development they are awaiting is the approval of a Bitcoin exchange-traded fund (ETF) by the US Securities and Exchange Commission.
Brody also stressed that Bitcoin is fundamentally different from traditional assets like gold. Unlike gold, Bitcoin’s price does not result in increased issuance. Instead, the issuance of new Bitcoin decreases over time due to halving events, making its price more “rigid” compared to other assets traditionally used as inflation hedges.
Furthermore, Brody pointed out that the purpose behind acquiring Bitcoin varies among buyers. Many investors are buying it as an asset rather than a payment tool. On the other hand, Ethereum, another major cryptocurrency, is primarily acquired for its utility as a computing platform, especially for business transactions and decentralized finance (DeFi) solutions.
Looking at recent market trends, Bitcoin has shown a bullish trend, with a nearly 10% increase over the past week and a 4.7% uptick in the last 24 hours. The price surge pushed Bitcoin beyond the $31,000 mark, reaching $31,824. By analyzing Bitcoin’s chart in the 1-day timeframe, it appears that the asset is poised for even higher gains. It has tapped into an order block and could continue its reversal to the upside, potentially reaching a notable high.
Considering the strong institutional demand for Bitcoin and the potential approval of a spot Bitcoin ETF, Brody believes that a rally to the $40,000 mark seems likely in the near future. However, he also emphasized that traditional fiat currencies will continue to hold their ground in the financial landscape. Nevertheless, with the ongoing discussions around Central Bank Digital Currencies (CBDCs) and the growing adoption of payment stablecoins, the crypto realm may be poised for further evolution.
Looking ahead, Brody predicts that global political developments and upcoming elections will contribute to accelerated growth in adoption and recognition of Bitcoin and the broader cryptocurrency space.
Featured image from iStock, Chart from TradingView.
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