Bitcoin’s price increased by more than 5% in the last 7 days.
While it’s uncertain what is behind the rapid increase in Bitcoin’s value, there are several positive announcements in the cryptocurrency sector. Global regulators have taken active steps to publish a framework to monitor risks from cryptocurrencies, while BlackRock, the largest asset management company is now interested in investing in blockchain technology.
Bitcoin’s price climbs as positive news increases in the cryptocurrency industry
Bitcoin has experienced quite a bearish market in 2018, dipping below $6,000 at the end of June 2018. Despite this slump, Bitcoin has managed to bounce back quite successfully. Some believe that the BlackRock news may have boosted investor’s confidence in the industry. Reuters reported that BlackRock’s decision acted as a major institutional endorsement for the emerging technology, especially since the asset management company managed $6.3 trillion in assets as of June 30.
London’s Financial News initially reported BlackRock’s decision to invest in blockchain technology. Larry Fink, the chairman, and CEO at BlackRock later confirmed in an interview with Bloomberg that the company is “very excited about blockchain technology.” Fink added in an interview with Reuters that he doesn’t see a “huge demand for cryptocurrencies.” He mentioned in the Bloomberg interview that he “has not heard from any one client… they’re looking to… to buy cryptocurrency as this time.” BlackRock however, mentioned that they have a working group studying the technology.
Chris Yoo, a portfolio manager at Black Square Management, a hedge fund dedicated to the cryptocurrency space mentioned to Reuters, “BlackRock exploring crypto assets comes as no surprise and is definitely a positive development for the crypto market. As the largest asset management firm in the world, its interest in crypto assets could be a catalyst for upward price movement and encourage other asset managers, even with more conservative strategies, to seriously explore investing in the crypto space.”
BlackRock announced their decision just days after Steve Cohen’s, venture company, Cohen Private Ventures, decided to invest in Autonomous Partners, a cryptocurrency-focused investment fund.
Matt Greenspan, a senior market analyst at eToro, mentioned that “the idea of big financial firms moving into crypto certainly isn’t new and this is a trend we’ve been noticing gaining strength since November.” The movement of institutional investors into the blockchain and cryptocurrency space is providing greater confidence for retail investors.
Global Regulators create a framework to monitor cryptocurrency assets
Institutional investors entering the blockchain and cryptocurrency market aren’t the only positive news to impact the cryptocurrency industry. Although cryptocurrencies aren’t a major risk to financial stability in the global economy, global regulators have taken the initiative to publish a new framework to monitor any risks from cryptocurrencies.
The goal of the framework is to assess any financial risks early enough to take immediate action. The Financial Stability Board (FSB), the organization that coordinates the financial regulation of the G20, mentioned that the framework looks at how impending risks from the cryptocurrency market could impact other markets in the financial system. The framework, therefore, includes trading volumes, pricing, clearing and margining for derivatives linked to crypto assets.
“Monitoring the size and growth of crypto-asset markets is critical to understanding the potential size of wealth effects, should valuations fall,” said the FSB in a statement. “The use of leverage, and financial institutions exposures to crypto-asset markets are important metrics of transmission of crypto-asset risks to the broader financial system.”
While the framework is useful, the FSB mentioned that their data is still fairly patchy. They will assess in the future whether the framework would require additional data. The FSB also mentioned that while cryptocurrencies and cryptocurrency exchanges do not pose significant financial risks to the stability of the global economy, they raise concerns like money laundering, terrorism financing, market integrity, and consumer and investor protection.
Bitcoin’s not the only cryptocurrency rising in value
While Bitcoin is up 5% in the last 7 days, the combined global market cap of all cryptocurrencies has outperformed Bitcoin. The global market cap is up 7.07%, from $253,011,000,000 to $270,897,000,000.
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