Only the most optimistic Bitcoin experts had confidence in the last few months of 2018. A year after the peak of crypto fever, when Bitcoin briefly hit $ 20,000 in value, only about $ 3,000 was left. Critics who have long pointed out the risks and the lack of fundamental value of Bitcoin and other cryptocurrencies are right.
But this year, Bitcoin has made another big step forward. The current price of around $ 27,000 means it has doubled in value since early November. Calculated from March this is a huge five-fold increase. Has anything changed since the crypto bubble burst in 2017?
“A few obvious things have changed,” says Teunis Brosens, an economist who tracks the digital currency for ING. In the Netherlands, for example, companies that facilitate trading in cryptocurrency have to register with De Nederlandsche Bank. A measure resulting from new European agreements to combat money laundering and terrorist financing. This means, among other things, that customers who want to buy or sell Bitcoin must send a copy of their passport. Brosens sees a similar move towards more regulation in the United States.
“All in all, that’s a plus for Bitcoin,” he says. According to him, it leads to the second change. “More regulation paves the way or at least removes an obstacle for companies and financial institutions to offer Bitcoin to customers.” The next question, according to Brosens, is whether this makes sense.
However, this does not change the fact that the list of financial institutions that buy Bitcoin or offer it to their customers is growing steadily. For example, Fidelity, one of the largest asset managers in the world, has a Bitcoin fund for wealthy clients. Customers of the online bank Revolut can also buy and sell various cryptocurrencies in one app. The payment service PayPal wants to enable payments with Bitcoin, and a large American insurer recently bought Bitcoins worth $ 100 million.
Lukas Daalder, investment strategist at Blackrock Netherlands, sees this growing interest also from large professional investors. According to him, Bitcoin is particularly strong at finding new user groups over and over again. “At first it was anarchist money that put banks out of circulation, then blockchain became a discovery that would change everything. Neither has come true. Now you can see that big investors are starting to smell it. “
According to Daalder, this is mainly due to the infrastructure that has been built around Bitcoin since 2017. Among other things, he refers to stricter regulations and a market for Bitcoin derivatives. This allows speculation about price increases and decreases without owning Bitcoin.
According to Daalder, the question arises whether Bitcoin – if there is good protection against hackers – is so different from gold. “It’s not a buy recommendation, but you can imagine that we have entered a new phase.”
“Not as busy as 2017”
Dutch companies operating in the crypto market are mainly aimed at private individuals. Due to the still largely opaque crypto trade, it is impossible to say to what extent they are (also) responsible for the price increase this year. At the beginning of 2018, more than half a million Dutch people owned cryptocurrencies that the Dutch financial markets authority had examined at the time. That number fell over the year as the value of Bitcoin fell. There is no comparable research for 2019 and 2020.
“Our members can see that it is getting busier and busier, but we are not yet at the level of 2017,” says Chairman Patrick van der Meijde of the United Bitcoin Companies Netherlands association. At this point, several companies had to stop customers. In addition to the increasing demand from professional investors, Van der Meijde cites the drying up of the supply of cryptocurrency as an important reason for the recent price increase. “The problem is halved every four years. The last time was last May. It matters. “
Warning not changed
The Dutch authority for financial markets warned several times during 2017 about risks such as money laundering, hacking and currency manipulation. “This warning is still in place,” said a spokesman.
The AFM recommends that consumers looking to invest money in cryptocurrency read carefully and only invest money that they can save. Investing in cryptos can lead to big disappointments. You run the risk of losing all of your investment. “