• What effect this has on the investment outlook for Bitcoin and other cryptocurrencies

  • Digital assets, including Bitcoin, are a relatively new economic concept, and any investment vehicle in its early stages has been scrutinized. Bitcoin’s story has been similar, and its price implications have been significant for both the top coin and the larger space.

    However, when Federal Reserve Chairman Jerome Powell confirmed that the United States had no plans to ban Bitcoin and cryptocurrencies, supporters breathed a sigh of relief. But, can Bitcoin and other cryptocurrencies avoid the scrutiny of the Feds and continue to grow?

    Adoption is critical.

    One of France’s leading banks recently approached MakerDAO to propose the submission of bond tokens as collateral for a DAI stablecoin loan. Many publications consider the proposal titled “Security Tokens Refinancing” to be historic, referring to it as the “first experiment at the crossroads between regulated and open source initiatives.”

    While such developments are critical for the sector’s growth, there have also been institutional developments that have fueled the narrative of the blockchain’s and Bitcoin’s growth. According to one report, Blockchain start-ups raised a record $4.38 billion in the second quarter alone.

    However, as highlighted by a CoinMarketCap report, many of the world’s top companies were experimenting and working with blockchain technologies. Microsoft Corporation, Alphabet Inc, Saudi Aramco, Amazon, and Facebook were among the companies on the list. Thus, blockchain technology and cryptocurrencies appeared to be on the right track in terms of adoption. Along with that, the US SEC’s approval of a Bitcoin ETF could be a game changer.

    Inflation protection

    Aside from adoption, Bitcoin’s story as an inflation hedge has bolstered its case as a traditional asset class. Powell claimed in a recent interview that the country’s inflation is the result of “often-repeated supply chain crises caused by the Government’s pandemic response.”

    However, the monetary base of the US dollar is $20 trillion, whereas BTC’s was around $990 billion at the time of publication. So, before BTC can be considered an effective bet against inflation, its market cap must reach at least half that of the US dollar.

    Despite the fact that sell-offs reduced AUM for digital asset investment products, a rise in volumes in September, combined with positive weekly inflows for the first time in three months, suggested that there could be an upside going into the fourth quarter of 2021.

    So, with these developments in place, the coming months look promising for the space, at least in terms of institutional growth and regulatory acceptance. Furthermore, with consumer spending increasing by 0.8 percent in August and savings rates falling by 9.4 percent in the United States, consumers may turn to BTC and altcoins.

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