Everybody who has been involved with cryptocurrencies for a long time remembers the hay days back in the end of 2017. The entire crypto market was booming and Bitcoin reached its all-time-high on 17 December 2017 at USD 19,758.20. That is, all-time-high thus far.
Since then, the market has been shifting and the prices have been going down rapidly. Search engines have reported a great drop in the number of searches for “Bitcoin”, with a 90% reduction from December 2017 to December 2018.
This shows that the public’s general interest in cryptocurrency also is connected to the cryptocurrency market prices. FOMO, once again.
But, the big question remains. Now when the price of Bitcoin is around USD 5,900 [being the same level as it was at in October 2017], is it the right time to buy? Or, should you wait a little bit longer to ensure that there are no new all-time-lows just around the corner?
In order to give a good answer, you need to consider all possible factors and not focus solely on one. But if you narrow down your focus and only look at the effects of regulation, the answer is “wait”.
From a regulation perspective – hold your horses
As we have seen from the past, when different nations and states say that they are contemplating regulation of cryptocurrencies, cryptocurrency prices tend to drop.
This is a natural market response seeing as most non-professional investors perceive regulation to be an obstacle to cryptocurrency.
What many people do not know though is that the inflow of most institutional money into the cryptocurrency market is conditional upon regulation being in place.
Institutional investors consist of pension funds, mutual funds, money managers, insurance companies, investment banks, commercial trusts, endowment funds, hedge funds, etc.
These investors normally have so-called investment mandates, stating that they are not permitted to invest in any financial instrument that is unregulated.
Accordingly, the investment mandates typically prohibit institutional investors from investing in cryptocurrencies, as cryptocurrencies are not regulated.
However, if cryptocurrency becomes regulated, then institutional investors can invest in them. The likely effect is then a great price increase as the demand for cryptocurrencies surges.
To give you an understanding of the impact the inflow of institutional money in the cryptocurrency markets can have, consider this. The total market cap of all cryptocurrencies in the world today is roughly USD 185 billion.
One of the dominant institutional investors in the world – Fidelity Investments – have assets under management worth USD 2.5 trillion.
And that’s only one investor! Fidelity could theoretically buy every unit of every cryptocurrency in the world 13 times over!
Moreover, according to research that Fidelity released on 2 May 2019 where they had interviewed 441 institutional investors from USA, 47% responded that they were likely to invest in cryptocurrencies during the next five years.
To summarize, issuing regulation for cryptocurrency will likely have a short term price decreasing effect, as the non-professional investors worry about the possible obstacles that the regulation may pose, whereas the long term effect will likely be a great price increase as the regulation enables inflow of institutional money.
The wise move, focusing on the effects of regulation, could then be to wait for the initial price decreasing the effect of regulation to occur and then enter [or re-enter] the market before the institutional money flows in.
Where to buy?
Regardless of whether you choose to go in now or wait, it is important to consider where to buy. Different exchanges charge different trading fees, and you have to ask yourself:
“Why should I pay more than I absolutely have to?”
The answers is: you shouldn’t.
The company Cryptowisser lists more than 400 cryptocurrency exchanges in their Cryptocurrency Exchange List where you can filter all exchanges based on which cryptocurrency you want to trade, what fee you accept to pay and how you want to purchase [credit card, wire transfer, etc].
A useful tool for all current or future cryptocurrency investors that don’t want to pay more than they have to.
To conclude, one can never be sure of when the right time to enter or re-enter the market is. The decision should be thoroughly considered and include many different factors.
However, from a regulation perspective, it might be wise to stay cool. And, when you decide to go in, you should also consider through which exchange to go in.