Large financial institutions entering the cryptocurrency space in large numbers could generate thousands of more investors and billions of dollars in additional funding. This has a positive impact on the underlying asset value of the asset in the long run.
This is because the value of cryptocurrencies comes not from the independent pricing behavior of tokens in the market, but from the size of the underlying network they support, says Jahon Jamaica, co-founder of Sarson Funds. Tokens like Bitcoin and Ethereum are more valuable to each node, connector, or participant as they mean the continued growth of the network.
A good example is the internet. In the early days, connected computers and dial-up connections could share information about sharing protocols, but due to the small number of participants, computers with modems were relatively of little value to most users.
When I first encountered the Internet, NASA was the only elementary school in the mid-1980s to use a 300bps dial-up modem. A few years later, companies such as America Online, Prodigy, and Compuserve have dramatically increased the value of connecting millions of Americans and connecting them to another computer.
Jamari said the same would happen with cryptocurrencies.
“They (cryptocurrencies) are not stocks,” he said. “What we see is like the growth of the Internet and the expansion of telecommunications.”
However, much media attention is focused on price behavior. In April, Bitcoin fell more than 50% next month amid Chinese restrictions on cryptocurrency mining, trading and banking, and tighter media surveillance of regulators, elected officials and the Bitcoin environment. Before it reached a record price of nearly $ 65,000. As a result, volatility, security.
However, the increasing value of tokens such as Bitcoin can create thousands of clients who are eligible to be serviced by advisors. These clients need to help manage and diversify growing assets and silence the potential tax effects of high-value assets.