A recent report by Jonathan Cheesman, a partner at the blockchain-centric financial management firm Distributed Global, is now making some headlines.
The article is a breakdown presenting the case of Bitcoin to an investment committee, which Cheesman has decided to share with the ”broader finance community”. In it, he argues that Bitcoin fell from its high at the end of 2017 due to regulatory uncertainty and immense sell pressure.
More specifically, Cheesman lists six major reasons as facilitating the fall in the price of Bitcoin and subsequently leading to the bearish trend we are currently witnessing.
These six catalysts consist of the general macro market trend, the speculative dominance, and reflexivity inherent to Bitcoin, as well as regulatory hesitation, weak scams, the natural mining supply of Bitcoin, and widespread short selling of the cryptocurrency.
Furthermore, Cheesman argues that the regulatory hesitancy currently being witnessed means that classifying cryptocurrency assets becomes immensely complicated.
Although regulatory progress is slowly being made, this uncertainty means that institutional investors, custody, insurance, data and risk management solutions have all inadvertently been delayed.
Nonetheless, Cheesman also notes that although the general cryptocurrency market is currently beset by weak projections and has experienced scams, these projections should soon turn around merely due to the comparatively significant decline in the price of Bitcoin already witnessed.
In addition to this, Cheesman also points to short selling as something that can potentially be ”extremely vulnerable” for those partaking in it.
This mainly relates to the notion that whilst an investor can only lose the amount he has invested, a short seller can see huge losses that far outstrip their initial investment, as there is no theoretical limit for how many percents an investment can increase.
Cheesman also goes on to state that he is adamant that digital and sovereign currencies will continue to exist side by side.
However, he added that whilst this can very well be the case, increased globalization will likely ”shift the gaze of our imaginations beyond the nation-state”, potentially causing fiat currencies to be superseded by decentralized ones.
Moreover, Cheesman notes that the six catalysts he lists as precipitating the current bearish cryptocurrency trend all will lessen in severity ”as the world gets more comfortable with distributed ledger technology.”
He urges all investors to have an allocation to Bitcoin, and moreover to closely watch how the security token market and other cryptocurrencies develop, as institutional investors will soon flood into the market – with this being ”the last point that recommends allocating ’sooner rather than later.’”
Ultimately, Cheesman notes that although Bitcoin shows great potential to involve into an accepted and widespread payment solution, investing in the cryptocurrency is warranted even if it is ”merely” seen as a store of value.
Photo by David McBee from Pexels
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.