Image for post
Image for post

Tether Printing, And Regulatory Concerns: Why Institutional Investment Is Still Not Ready For Bitcoin.

By Yum Kasukawa on ALTCOIN MAGAZINE

Yum Kasukawa
Aug 3, 2019 · 4 min read

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.

Image for post
Image for post

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.

Image for post
Image for post

The Capital

A publishing platform for professionals now available on https://thecapital.io

Sign up for Try The Capital Platform at thecapital.io

By The Capital

Head over to https://thecapital.io, sign up and publish your first article today! Take a look

By signing up, you will create a Medium account if you don’t already have one. Review our Privacy Policy for more information about our privacy practices.

Check your inbox
Medium sent you an email at to complete your subscription.

Yum Kasukawa

Written by

Co-Founder of Bittreo, retail, OTC brokerage, and online exchange, formerly Vancouver Bitcoin. The future of currency is digital. https://bittreo.com

The Capital

A publishing platform for professionals in business, finance, and tech

Yum Kasukawa

Written by

Co-Founder of Bittreo, retail, OTC brokerage, and online exchange, formerly Vancouver Bitcoin. The future of currency is digital. https://bittreo.com

The Capital

A publishing platform for professionals in business, finance, and tech

Medium is an open platform where 170 million readers come to find insightful and dynamic thinking. Here, expert and undiscovered voices alike dive into the heart of any topic and bring new ideas to the surface. Learn more

Follow the writers, publications, and topics that matter to you, and you’ll see them on your homepage and in your inbox. Explore

If you have a story to tell, knowledge to share, or a perspective to offer — welcome home. It’s easy and free to post your thinking on any topic. Write on Medium

Get the Medium app