By Yasin Ebrahim
Investing.com – The wild swings in bitcoin continued Friday, but business activity on the blockchain has never been better, and will eventually help part the clouds of fear, uncertainty, and doubt, propelling the popular crypto to $100,000 by year-end.
fell 6%, to $36,115.
“I expect to see $100,000 this year … we should be close to that level already based on the halving cyclical, but we’re not there because there’s confusing narratives [including regulation] that haven’t shown up yet.” Michael Venuto, chief investment officer for Toroso Investments said in an interview Thursday with Investing.com.
“The recent price action in BTC will calm down because the business part of this, the part where, bitcoin, other cryptocurrencies and decentralized finance are being used to revolutionise finance is in a better shape than it’s ever been in history,” Venuto added.
A halving event – that halves the reward for mining Bitcoin transactions and the supply of newly minted bitcoin – occurs roughly every four years to keep a lid on inflation. Halving events in both 2012, and 2016 had preceded previous bull runs for BTC.
The most recent halving event in May last year, cut the block reward for mining bitcoin from 12.5 BTC to 6.25 BTC, and helped bring the supply and demand narrative into focus. A quick look at where we are in the current cycle suggests there is plenty of room for bitcoin to run higher.
“Based on the halving cycle, supply and demand, and the retail sentiment, I don’t think we’re anywhere close to the end of the bull run,” Venuto said.
During the recent selloff, the smaller, novice investor on a trading diet of leverage and greed was widely signaled out for panic selling, adding fuel to the downside. But the hedge funds and institutions, trading on leverage, may have been caught up in FOMO fever, and ultimately also fell victim to the margin squeeze.
Regulation, or the lack thereof, may have something to do the with the bearish institutional bets.
The dearth of options available to institutions to buy and hold bitcoin in an investment vehicle that fits their world, gives “more access and ability for traditional finance to short bitcoin than they have to be buy and hold investors,” Venuto said.
Unlike retail investors, institutions are typically not permitted to directly buy bitcoin on crypto exchanges, or hold it in a wallet.
Many have touted a bitcoin ETF in the U.S. as a solution to plug the gap. But it’s unlikely to come anytime soon even with an SEC chairman who has a strong grasp of blockchain technologies.
“[W]e’re in a world where the laws that govern how we treat financial instruments were written in 1940 and 1933,” Venuto said. “The U.S. government needs to make a much bigger statement about what is to them and whether it should or shouldn’t be subject to these securities laws.”
Concerns about the environmental impact of mining BTC has also played a role in souring institutional sentiment on bitcoin. A narrative that was given credence in the wake of remarks by Tesla (NASDAQ:) chief executive Elon Musk in recent weeks.
“It was precipitated by the ESG movement and this notion, which was exacerbated by Elon Musk, that there are some real environmental problems with the mining of bitcoin,” ARK Investment Management founder Cathie Wood said Thursday at CoinDesk’s Consensus 2021 conference.
But the notion that bitcoin is a dirty crypto – given the energy used up to mine blocks on the blockchain – is somewhat of misnomer at least in the U.S. as most “American miners use clean renewable energy,” Venuto said.