Tether Printing, And Regulatory Concerns: Why Institutional Investment Is Still Not Ready For Bitcoin.
Institutional investment in cryptocurrency isn’t happening fast enough. At least that is the opinion of Binance CEO Changpeng Zhao (CZ). According to CZ, people who buy Bitcoin are still predominantly retail investors. This is worrying, as retail investors are prone to last-minute FOMO and panic selling. The two main reasons why cryptocurrency prices are so volatile.
Why Are So Few Institutional Investors Looking to Buy Bitcoin
Some institutional investors are buying Bitcoin. Fundstrat and Grayscale are two mainstream investment firms which have heavily made cryptocurrency investments. However, institutional investment in Bitcoin and other cryptocurrencies is still altogether lackluster. As for why this, there are several possible reasons.
Tether Bitcoin Price Manipulation Fears
Just 2-years ago in 2017, Bitconnect Coin was still one of the top tradeable cryptocurrencies on the market.
At the time, there were already calls to dump Bitconnect Coin, due to Bitconnect itself being little more than a Bitcoin Ponzi scheme. Sadly, few listened.
When Bitconnect collapsed in January 2018, thousands of people lost millions of dollars. This is important, as some cryptocurrency commentators currently liken Tether and Bitcoin to a new Bitconnect crisis in the making.
Has Tether Turned Bitcoin Into The Next Bitconnect?
Why some investors worry about Tether is simple. Daily Tether trading volumes currently stand at $23,755,923,436. This is comparable to the total daily trading volume of Bitcoin itself. Many, therefore, see Tether issuing millions of new coins on an almost daily basis, as the chief driving force behind current Bitcoin price rises. More importantly, Tether has some striking similarities to Bitconnect.
- Tether does not disclose banking details to the public. The whereabouts of the Tether backed USD is unknown.
- Tether Limited has not forgone an independent audit. If the Tether in circulation is backed by real USD deposits it remains a mystery.
- Tether Limited does not have an official business address.
- To avoid having to comply with the U.S. and other local financial regulators, Tether Limited is based out of several off-shore locations.
Until Tether accounts go through an audit, a strong case can be made for the eventual crash of Bitcoin. This could be part of a pending Tether Ponzi scheme exit strategy. Which in itself, is more than enough reason for institutional investors to avoid Bitcoin and cryptocurrency in general.
Regulations Worry Institutional Investors
As well as growing Tether concerns, institutional investors are deterred from buying Bitcoin due to regulatory worries.
India has recently begun making moves to ban Bitcoin. At the same time, Facebook’s new Libra cryptocurrency is facing opposition by Congress, which may lead to new regulations imposed on digital currencies overall. It is, therefore, likely that institutional investors will not start looking to buy Bitcoin until it is clear how cryptocurrencies might be regulated in the future.
Bitcoin Brand Wars
Concerns about Tether and potential future regulation aren’t the only things preventing people on Wall Street from investing in Bitcoin.
As of 2019, there are now three versions of Bitcoin on the cryptocurrency market. (Namely, Bitcoin, Bitcoin Cash, and Bitcoin SV.) Moreover, all of the aforementioned coins claim to be the one true Bitcoin and this is cause for no shortage of confusion.
Naturally, most investors and cryptocurrency commentators only consider BTC the real Bitcoin. Still, this doesn’t change the fact that anyone can seemingly create their own version of Bitcoin. At the same time, the possibility of throwing the cryptocurrency market into chaos is not far from true.
When Will More Institutional Investors Start Buying Bitcoin?
All things considered, it is clear why many institutional investors are still reluctant to buy Bitcoin in 2019. However, addressing regulatory concerns and making light of controversies such as Tether printing could lead to more institutional investment. Until then Bitcoin price volatility will continue as the immature cryptocurrency market continues to be predominantly made up of Bitcoin Whales and retail investors.