Not only that we can see $15k for the Bitcoin price, but most likely $16k is in the cards too. How come? For one thing, Bitcoin price action remains bid. The market keeps forming higher highs and higher lows, a typical bullish formation.
Moreover, the cryptocurrency formed an inversed head and shoulders pattern. The dive in March represents the head for the pattern, then the market broke the neckline ($10k), retested it, and now is ready to go for the measured move.
A Surge in Cryptocurrency Deposits
The good news for Bitcoin continues to resurface. It started with MicroStrategy announcing an investment of over $100 million in Bitcoin. It continued with Square announcing $50 million. The PayPal news last week was responsible for a new leg higher in Bitcoin.
This week it is the Silvergate Bank. The California based bank just announced that it accepted deposits in cryptocurrency in excess of half a billion dollars. While not that high as in Q4 2017, it reflects a strong appetite for cryptocurrencies from the general public and something that keeps a bid tone behind the Bitcoin price.
Bitcoin Price Technical Analysis
A close look at the chart below reveals that the measured move (i.e., the blue line) exceeds $15k. In fact, it stretches all the way to $16k and a bit more. Therefore, any bullish trade should consider the $16k as the target.
After a head and shoulders formation, the price typically retests the neckline. While not a mandatory condition, it happens most of the time. Moreover, when it does, it is a sign that reinforces the pattern.
To make the most of this pattern, bulls may want to go long at the market and set a stop-loss order at the $10k level while targeting the $16k. While the risk-reward ratio is not that impressive, it allows traders to participate in the bullish price action.
In the midst of increased interest in cryptocurrencies by policymakers and central banks due to China's intentions to issue a digital yuan, a Bank of Japan official said that the bank's move to launch a cryptocurrency would depend on public support, reported the Bloomberg.
"At the end of the day, there is no way to proceed without getting enough knowledge from the Japanese public," said Kazushige Kamiyama, who heads BOJ's payment systems department.
In the event that the central bank later makes a digital unit, Kamiyama indicated that it would seek to strengthen the transaction ecosystem and would exist alongside cash and other types of digital payments instead of a monetary policy mechanism.
"We have clearly emphasized that banknotes and digital currency will coexist," said Kamiyama, noting that the cryptocurrency will not be "useful for deepening negative rates" since the banknotes will exist.
COVID-19, for its part, continued to accelerate the use of non-cash payments in the country and elsewhere, illustrating the growing desire for different and easier ways to transact.
Although the Bank of Japan does not have an immediate timeline for issuing cryptocurrencies, the central bank's deputy governor indicated in January that he should analyze the potential and be ready.
If the technology gains increased public interest, said Masayoshi Amamiya at the time, there may potentially be a need to issue digital coins from the central bank (CBDC).
There are still a number of details that have to be analyzed before a CBDC can be issued, with issues that remain such as its impact on monetary policy and ensuring the application of specific and strong security rules.
However, he stressed that he considered it "very important" that the BOJ continues to analyze the viability of the circulation of the CBDC.
In other CBDC news, the Federal Reserve is working together with seven other central banks and the Bank for International Settlements (BIS) to set up a framework that would facilitate the path for issuing digital currency.
The investment bank makes a bullish comment for bitcoin as an "alternative currency" that not only serves as a storehouse of wealth but also as a means of payment.
The tide is changing.
This week PayPal announced support for cryptocurrencies, and now JP Morgan is changing the tune, as it says, Bitcoin is competing with gold as an "alternative" currency.
The physical gold market, favored by older generations, is worth $ 2.6 billion, including assets held within gold ETFs.
Bitcoin, on the other hand, has a market cap of $ 240 billion and is mostly favored by millennial investors. In 2020, to date, Bitcoin has increased by more than 80% compared to almost 25% of gold.
To recover in terms of market value, the leading digital currency would have to rise more than 10x above current levels. JPMorgan said in a note on Friday,
"Even a modest agglomeration of gold as an 'alternative' currency in the long run would mean doubling or tripling the price of bitcoin"
Over time, the investment bank said that crypto could be owned for reasons other than just being a wealth store like gold is.
"Cryptocurrencies derive from value not only because they serve as stores of wealth, but also because of their usefulness as a means of payment. The more economic agents accept cryptocurrencies as a means of payment in the future, the greater their usefulness and value"
PayPal also mentioned that the payment company's endorsement is "another big step towards corporate support for bitcoin". This, they said, would further reinforce the use of BTC millennials as an alternative currency.
Greater interest in institutional investors
Overall, the long-term potential for bitcoin is considerable, as it competes more "intensely" with gold, "given that millennials would over time become a more important component of the investor universe," says JPMorgan.
Millennials and corporate support for digital currency have also sparked greater interest from institutional investors, the report says.
This is evidenced by the peak of activity in both bitcoin futures and options in CME. Prior to Paypal's announcement this week, open interest on CME's BITCOIN futures measured a record of 10.5K contracts per day in the third quarter, an increase of 32% in terms of the second quarter and an increase of 127% compared to 3rd quarter of 2019.
In addition, the institutional flow registered strong growth, with 692 new accounts added, and the number of large holders of OI also registered an average of 79 in the 3rd quarter, an increase of 64% in relation to the 3rd quarter of 2019.
"Holy Cow. Most of the bullish bitcoin comments I read from JP Morgan," noted Dan Tapiero, co-founder of 10T Holdings. "A piece of widespread investigation reaches all customers of the bank. Paypal has announced" coverage "for other traditional players to get involved," he added.
Totally 86% of traditional companies are implementing or at least considering blockchain-based decentralized finance technology, says Boston Consulting Group.
More than four out of five traditional European financial institutions now see decentralised finance, or DeFi, as a technology worth implementing or at least considering.
That's according to "The Sudden Rise of DeFi," a new study of 411 insurers, banks and trading companies released by Crypto.com and the BOSTON Consulting Group BCG Platinion with an IT focus on October 22.
Specifically, 86% are implementing or evaluating services based on a decentralized structure.
Noting that the blocked value in DeFi grew an impressive 1,500%, to $8 billion, the report concluded that the "ability to borrow, make loans, deposit funds into a savings account or trade complex financial products, all without asking anyone because permission is gaining strength."
Larger companies are shifting more aggressively to DeFi, with 71% of those with a balance sheet above $13.1bn (£10bn) implementing or evaluating the technology, compared with 51% of those below $131m (£100m).
"Research shows that the adoption of DeFi is not just limited to the blockchain industry," crypto said. with co-founder and CEO Kris Marszalek. "Traditional financial institutions of all sizes are seeing DeFi not as a competitive threat, but as a valuable tool for delivering more decentralized and efficient financial services."
Of the companies surveyed, 38% - and 61% of the largest companies - are using DeFi to "facilitate faster and safer payment processing services," the study concluded.
Two-thirds of respondents - 67% - believe DeFi will open up new revenue streams, while 70% believe it can make financial transactions faster and cheaper.
"As markets evolve toward decentralization, there will be a growing demand for approaches such as DeFi, which can provide a more efficient and open form of banking, trade and investment," concluded Kaj Burchardi, managing director of BCG Platinion.
"It is encouraging to find that financial institutions are already seriously and strategically collaborating with the cryptographic community to begin building a new generation of governance and technologically resilient solutions that will make financial services more accessible."
Work to be done
That said, the report found serious concerns about the lack of regulation, with 61% saying it made them hesitate - a concern that worsened for companies with higher turnover or more assets under management.
Almost the same number - 60% - said the lack of recovery mechanisms is worrisome.
Fraud security concerns are another challenge, with 70% saying it prevents DeFi adoption across the enterprise.
Still, the risk of vulnerabilities in smart contracts that put assets at risk is the biggest concern of DeFi research participants.
"There's still a lot of progress to be made to bring DeFi into the mainstream, especially in security and compliance," Burchardi said.
This is something that European regulators recognise. The European Commission last month unveiled "ambitious" proposals to regulate cryptocurrency assets and service providers. Unfortunately, it also predicted that it would take four years for these regulations to enter into force.
In recent years, investors have had to get used to the cyclical nature of the crypto markets. The last of these cycles, decentralized finance, is still developing. DeFi tokens have achieved unprecedented valuations in record time only to quickly empty, erasing tens or even hundreds of millions of dollars in market value.
The main reason why encryption and especially altcoins are so volatile is the lack of new money in the markets. Bitcoin and Ethereum may attract institutional investors, but altcoin traders still usually play a game of musical chairs. The rise of DeFi, for example, correlates with the brightness less performance of the pre-2017 alts - it's the same money chasing the next big bomb. Of course, we need new entries, but from where?
"Adoption" is the obvious answer, but it's worth clarifying what it means - real-world companies paying real money for blockchain projects that redistribute part of it to token holders through creative tokenomics.
The perfect use case for a huge market
One of several sectors where blockchain technology can make a real difference is big data. It is a huge market that is worth $138.9 billion by 2020 and will nearly double to $229.4 billion by 2025, according to market and market statistics.
While blockchain is generally a weak candidate for replacing centralized databases, it is fantastic to ensure the provenance and authenticity of the data. Even governments, usually slow in the adoption of new technologies, have begun to implement pilot projects. The Singapore Public Service is seeking to adopt blockchain to verify supplier history in GeBiz, thereby tracking the career movements of public officials and supporting or even replacing audit processes.
Estonia is already using technology to store public records. The UK Land Registry has partnered with the Methods project to develop a platform that stores land registration information and streamlines the process of buying or selling properties.
In the private sector, manufacturers are investing increasing amounts in research and development of integrated big data solutions. Suppliers are working to reduce equipment costs to gain a competitive advantage, optimize sales cycles, simplify customer service, and better understand customer needs.
GoldsteinResearch says key industry participants such as IBM, HP, Google, SAP, Cloudera and Oracle are progressively investing in R&D to develop unified big data solutions to provide enhanced analytics and integrated data management.
Companies are focusing on mergers and acquisitions to diversify their product portfolio with big data and mainframe technologies. For example, in 2015, Microsoft acquired Revolution Analytics to expand its business to cloud-based platforms. Similarly, IBM acquired Cloudant and Cleversafe to strengthen its cloud platform business.
In short, corporate big data is a huge market and blockchain technology can realistically capture a significant part of it. Projects in developing these blockchain big data solutions will achieve "true adoption" in the sense that they can attract new money to the crypto ecosystem.
Moreover, big data does not only concern the corporate market. The DeFi cycle may be deflating now, but the idea of decentralized finance is compelling and here to stay - and big data is right at the heart of it.
From understanding behaviour, patterns to KYC/AML compliance and reliable pricing feeds, big data is everywhere in DeFi. Oracles are an especially important use case with projects like Chainlink, Band Protocol, Tellor and Kylin Network – all of which have been on the market for a while and are growing.
A quantifiable investment
The size of the addressable market for big data blockchain projects is attractive, but what is even more attractive is that they can evolve into quantifiable businesses.
It is difficult or even impossible to apply traditional financial metrics to most altcoins, as there is no revenue. The price reflects hope, not fundamentals. Projects with real economic activity, on the other hand, can be analyzed - you can calculate profit per token or price per token in the same way you would for publicly listed stocks.
This makes big data blockchain projects a more conservative and reliable investment than tokens in the hype cycle. Some think this is a disadvantage, but they are perfect for building a diverse portfolio of lunar shots and reliable winners. Industry resources such as CoinGecko have already realized this trend and are monitoring big data projects as a niche that can become the "next big thing" that will overshadow even DeFi.
Blockchain data projects to watch
The three fastest development big data blockchain projects are Ocean Protocol, Quadrant, and Streamr. All three have real-world apps and real use cases.
Ocean Protocol helps developers create markets and other applications to publish, exchange, and consume data privately and securely. It also provides access control, data science, and other products that developers can use in their applications.
The Ocean Protocol got off to a troubled start with a controversial IEO and community shenanigans. However, the errors were rectified by the fact that the project rose to the top 100 in CoinMarketCap. The project currently has a market capitalization of more than $130 million.
The project roadmap points to the development of a community market in 2020, extensive improvements in the core of ocean protocol, new applications and improved infrastructure, and incentive to provide data.
Quadrant Protocol is the blockchain arm of Quadrant Global, a big data enterprise location company that has been around since 2014. After conducting an ICO in October 2018, the Quadrant Protocol was flying under the radar with little communication. Unfortunately, this is clearly reflected in the token price, as the project has a relatively low market value and trading volumes.
On the other hand, the company mentioned during its last AMA that the platform is already profitable. If they can find a better tokenomics model, the project may attract more interest from investors.
Recently, quadrant protocol began to communicate more. Your updated project roadmap includes four new initiatives with real-world applications. The first to be released is Cape Canaveral, a consent management platform that introduces transparency into data supply chains by registering user consent in the chain.
The Baikonur Project also looks interesting because it directly involves the community - they can collect and validate location data using a mobile app and be rewarded in the project's native token.
Streamr is an open-source software project distributed with contributors worldwide. It is positioning itself as the missing link in creating a real-time data protocol for the decentralized web. Streamr is listed on Binance with a market capitalization of just over $30 million.
The project roadmap is ambitious and includes the refinement of its internal economy and scalability research, which proves that the network has low and predictable latency. Another milestone for them is the creation of data unions for redistribution of data ownership.
In light of the growing importance of big data in all sectors, blockchain projects targeted at this field may be among the best performing. They have the opportunity to capture shares of a multibillion-dollar market and attract new money to crypto.
Projects such as Ocean and Streamr, both listed in Binance and with solid performance, can attract existing traders in the hope of making a profit from fluctuations. At the same time, the quadrant protocol seems to be undervalued without listings on major exchanges.
As blockchain continues to mature, we expect market cycles to become a little less volatile. There's always a "shiny new object" like ICOs or vegetable chips, but at the end of the day, adoption and money talk.
The last three months in Bitcoin have been marked by large corporate entities that have transitioned significant parts of their treasury holdings to bitcoins. In August, software intelligence company MicroStrategy announced that it has bought 0.1 percent of the total supply of BTC (its CEO Michael Saylor has already reached the ceiling and become something of a celebrity in space).
The large payments company Square, which for some time has offered BTC exposure to users of its mobile payments platform, allocated $50 million of its assets to bitcoin in early October. And just yesterday, the British fintech company Mode allocated 10% of its cash reserves to buy BTC as a treasury asset.
To compile this trend into a single, easy-to-digest database, Rodolfo Novak of Coinkite, also known as NVK, has launched bitcointreasuries.org. It lists the companies that have made the transition to keep bitcoin as a treasury asset, along with its market limits, the base price of their investment relative to today's value, the amount of BTC they hold and, critically, the percentage of the total supply of BTC that each bought. The allocations listed a total 3.74% of all bitcoin that will exist.
"I always assumed there was a place where you could see, not a complete list, but a list of large bitcoin holders who are not private entities," Novak told Bitcoin Magazine. "Especially with publicly traded companies because they have all their public books anyway and it's all audited. But I couldn't find anything and I love buying domains, so I started bitcointreasures.org [ ] in the hope of creating more FOMO for other companies"
The list consists mainly of blockchain-focused companies that have divested into BTC some time ago as part of their larger business missions. The Grayscale Trust, for example, holds the highest proportion of bitcoins on the list by far 2.17% of the total supply.
But many of the purchases or filings listed on the site occurred this year. Novak explained that while it may seem that many companies are jumping into Plan B at once, it is likely that even the most recent purchases have been planned for a long time, demonstrating HODLer's understanding of the asset.
"Corporate governance, especially for publicly traded companies, moves at a slug pace," he said. "So there must be some mechanisms in place - a kind of model of how to do this. And it took years to get done and, you know, bitcoin goes up, bitcoin goes down. And if you haven't been in this space for a decade, it's hard for you to understand that after bitcoin decreases, it increases again. The number goes up"
But the reasons for switching to a heavy treasure trove of bitcoins should be clear, especially in recent months.
"You have this value reserve, everything meets the pleasure of value booking," Novak said. "And, you know, you hold it because you still want to be above water 30 years from now…. It's like, 'Hey, I got money in the bank, it's going to suck, I need to find a solution.' And, you know, gold pet stones are not a solution"
What does this mean for Bitcoin?
As there is a finite supply of bitcoin (there will only be just a little less than 21 million BTC thrown into circulation), when any entity grabs a significant amount, it affects everyone who wishes to get their hands on some as well. And, as an important value proposition for bitcoin is this scarcity, these corporate purchases have implications for the price of bitcoin relative to fiat as well.
As a Bitcoiner who is ahead of corporate interests, Novak is optimistic about the trend.
"Everything is good for Bitcoin, right?" he asked. "The scarcity of bitcoins comes from the people who buy, right, and you have a stock limit for that. So the more these giants buy, the more the price goes up for everyone"
He also pointed out that the more different types of entities start retaining bitcoin, the more the network as a whole will benefit.
"You want your enemies to have bitcoin, you want your competitors to have bitcoin," he said. "Because the more types of people with different sets of preferences, different sets of incentives have, the more secure the network will be... If Kim Jong-un has bitcoin and the US has bitcoin and China has bitcoin, it's in everyone's interest not to make any changes to Bitcoin, right? Because if one wants a change that is beneficial to them, others will want that change as well. So it's a nice set of incentives"
Some retail investors may see this trend as a warning to stack satellites while they are still available. But Novak points out that while the list of bitcointreasuries.org is growing, there is still a significant opportunity to get ahead of most corporations.
"The little boy still has a chance to win a Berkshire Hathaway. You can even DCA for $10 a week or anything, and you can buy before them. So I don't think it's an opportunity that people should waste. It's a crime not to have exposure to bitcoin right now"
Where is this trend going?
When asked where the trend is going in the corporate allocation of BTC, Novak said he thinks bitcointreasuries.org will no longer exist in 10 years because "every publicly traded company that has treasury management in assets that are not just the dollar, they will have some exposure to bitcoin."
This seemed to be a matter of inevitable "hyperbitcoinization", but in the short term, it may help that some groups already on this list have published their disinvestment methodology in BTC. For example, Square has released a white paper detailing its investment. Novak could see this being used by other groups that are interested in following him toward Plan B.
"They have created a model that other publicly traded companies in the U.S. can simply follow and comply with regulations to do so. Now, just go to a [corporate] board and show that role. You go to your legal, show me that paper. Conformity, show me that paper, that's it. Just make the transfer and buy bitcoin"
A high run in the near future will likely also motivate more companies to follow Square's example. But the ultimate motivator may just be bitcoin's final game. Companies that have already arrived in bitcointreasury.org have adopted an amazing tool to choose to leave the legacy financial system if and when that is necessary. Others will want to join them.
"Now they have an instrument they can just send elsewhere. Let's say America decides to go to shit, right? They could just send this BTC, they don't need permission"
Cryptocurrency regulations should not be a guessing game. For this reason, Ripple, the San Francisco-based payment company behind RippleNet, will consider Japan, Singapore, the United Arab Emirates, Switzerland and the United Kingdom as potential destinations if they move from the United States, its CEO, Brad Garlinghouse Bloomberg said in an interview on October 21.
Ripple considers five countries if the United States is slow
Ripple is a for-profit company. Its executives, especially Brad Garlinghouse, have been urging U.S. regulators to formulate and implement appropriate encryption rules to help spur emerging sector growth in the world's leading economy.
Brad said that considering the weight of the regulation, there should be more clarity. In fact, regulations should not be left for interpretation. Instead of conjecture, U.S. lawmakers should clarify whether cryptocurrencies are commodities, properties, currencies or bonds.
While blockchain companies in the United States remain in limbo, Japan, Singapore and other countries that the payment company is considering have taken steps to develop appropriate laws that guide projects, clearly stating their expectations and what they must do to operate without problems within the limits of the law.
"The common denominator among all of them is that their governments have created clarity about how they would regulate different digital assets, different cryptocurrencies. Regulation should not be a guessing game. Ripple is definitely a proud American company and we would like to stay in the U.S. if that were possible, but we also need regulatory clarity so we can invest and expand the business."
Japan, for example, Brad said, has created an environment that allows the development of a very healthy market. It is in this jurisdiction that Ripple has a fruitful relationship with SBI Holdings, one of Japan's largest financial giants.
Through their partnership with the Yoshitaka Kitao-led company, they established SBI Ripple Asia, an alliance that helps drive the Ripple brand in Southeast Asia.
New Regulatory Framework in the United States
As BTCManager reported, the Conference of State Bank Supervisors - representing regulators from all U.S. states and territories in mid-September - launched a new regulatory framework for Fintech companies, including cryptocurrency companies.
They agreed on a single set of supervisory rules to reduce compliance costs, making it possible for money transmission companies, including cryptocurrency exchanges, to expand easily in different U.S. states.
As Bitcoin trading volumes decrease, the asset is being viewed more as a rare asset than as a negotiable currency.
Data says bitcoin is being used more as an investment than a negotiable currency.
The currency is seen more as a protection against volatility in the fiduciary markets.
Now it's behaving more like assets, including fine wines, rare whiskeys and classic cars.
Just over 12 months ago, the number of Bitcoins circulating in the markets was twice the second most liquid asset, Ether, the currency of Ethereum. Today, the opposite is true.
In fact, bitcoin trading volume has declined since 2018, but as we've seen this year, the price of Bitcoin has risen, surpassing $13,000 for the first time this year.
While we know that the price of Bitcoin goes up and down all the time, crypto market watchers in 2020 seem to be coming to similar conclusions: the nature and scope of this recent Bitcoin bull run looks and feels different.
In today's Market Watch (in association with AAX) we'll explore why this happens and why Bitcoin is now being treated in a similar way to how investors buy and maintain luxury items like wine, whiskey and watches.
Bitcoin becomes an asset
First, let's take a look at how the behaviour of Bitcoin traders has changed.
The number of Bitcoin addresses with more than 0.1 coins (currently about $1,188) is at an all-time high, and the number of addresses with more than 100 currencies (currently $1,188 million) has reached a six-month high, according to Glassnode.
The number of cryptographic whales, those that hold more than 1,000 BTC, also reached an all-time high in August this year.
It's not hard to see why. According to analysis site Glassnode: "98% of all unspent Bitcoin transactions (UTXOs) are currently in a profit state."
This has been a trend that has been maturing over several years, according to Grayscale's Bitcoin valuation report. In the newspaper, the grayscale noted a sharp increase in the number of holders - people holding Bitcoin for more than three years - versus speculators, people who have moved Bitcoin in the last 90 days.
The report also indicates that there has never been a higher level of Bitcoin owned for more than a year. Bitcoin is becoming a reserve of value, not a trading currency, which we will explore further in the next section.
Ethereum and Tether become the currency of cryptography
As we said before, just a year ago, Bitcoin was the lifeblood of cryptocurrency liquidity markets. But things are different now.
Ethereum's blockchain is now processing more than twice the volume of daily bitcoin blockchain transactions, riding a wave of massive growth in stablecoins and the DeF applications that use them.
A new report from crypto research firm Messari on third-quarter activity in DeFi and stablecoins revealed that the current 30-day average for Ethereum is about $7 billion; Bitcoin is below $3 billion.
If current rates remain, Ethereum is on track to see more than $1 trillion in annual transaction volume, a major reversal from 2019, when the volume of Bitcoin transactions was more than double that of Ethereum.
The tether, however, is not only the most traded stablecoin - Messari found that during the summer he grew up and surpassed even Bitcoin with an average 30-day transaction volume of nearly $3.5 billion.
Bitcoin has been knocked out of its traditional position, which is another reason why the prospect of Bitcoin is becoming more of a luxury asset than the cryptocurrency of the day. In the last section, we'll look at the similarities between how Bitcoin behaves and how other luxury assets behave.
Bitcoin, the fine wine of cryptography
When investors look at whether an asset or commodity is worthy of investment, one aspect they pay attention to is something called a stock-to-flow model.
This is a calculated value by dividing the existing supply of a commodity by the annual growth of the production of that commodity. Commodities with high stock rates for flow include gold, silver, wine, art, classic cars, watches and, yes, Bitcoin. Let's take the gold as an example.
The World Gold Council says approximately 190,000 tons of gold has already been mined. Let's call it stock. Every year, the gold industry withdraws from the soil something between 2,500-3,200 tons. This is the flow. In this case, the ratio between stock and gold flow is 59. This means that, at the current rate, it would take 59 years to extract 190,000 tons of gold. That means its value will remain very well.
Bitcoin's cash flow stock has behaved with a high correlation with this model. In essence, bitcoin's value is expected to increase as the amount of Bitcoin produced decreases over time, thanks to the way the network was built.
Assets like these are also seen as protection against market volatility.
Most market watchers see gold as a symbol of the investor's intent. When markets are down, the price of gold tends to rise. Which is true, as the graphics below attest. As stock markets have become more volatile this year because of COVID-19, so did the price of gold as investors rush to it as a refuge.
But buying and storing gold is difficult and involves a legion of intermediaries who charge for this privilege.
When investors fail to get their hands on gold, they look for other rare assets to put their money, such as wine, whiskey and watches, among other luxury items.
These assets have to deal with similar aspects of supply and demand, scarcity and availability, which has made investors look for rare items to keep as an investment. Take whiskey, for example.
According to the Knight Frank Wealth Report, the value of the rare whiskey industry has grown 564% in the last 10 years, with a 5% gain this year. Fine arts are up 141%, wines 120%, cars 194% and watch 60%. As the stock market's performance has faltered this year thanks to a global recession, investors are picking up the best things and holding them back because, like gold, there aren't many of these luxuries being produced or coming to market every year, so their value increases. Let's look at the watches in more detail, in particular the Rolex.
Rolex manufactures approximately 800,000 watches a year, giving it a constant supply. However, the availability of these watches is scarce. Waiting lists for popular models can reach five years, and access to these waiting lists is granted to existing customers who have bought Rolexes before.
Rolex also regularly stops tracks, increasing their shortage. For example, a type of Rolex, nicknamed "The Hulk" (because it's all green), was discontinued this year, causing its price to rise 200% in a few months.
This leads to a grey market, where the price of Rolex watches exceeds what you would pay in retail if you could get one, which makes them a surprisingly good investment. The same applies to certain types of wine, art and cars: there are not many of them and they perform better than other asset classes. Just like Bitcoin.
Bitcoin is not gold
Although Bitcoin is often compared to the response of cryptography to gold, this column states that it is more like a rare consumer commodity than gold, thanks to the way it is managed, bought and sold.
The supply and distribution of gold are managed by large institutions and state actors. It is also heavily regulated to prevent the entry of fake gold into supply - although it is more difficult to keep counterfeit precious metals out of the supply chain than people initially thought.
The supply and distribution of fine items such as wine or watches are not managed in the same way. Instead, it is a market more similar to buying and selling cryptocurrencies. There are brokers, and exchanges, buying and selling to individuals and legal entities in a more fluid way, without the same federal or institutional supervision. And a lot of people want it to stay that way.
Bitcoin, like a good wine, gets rarer over time, and investors are loving it.
The balance of Bitcoins on some of the major exchanges is falling rapidly, according to recent data.
There are many reasons why this may be the case, including the newly discovered appreciation of BTC.
With only a few exchanges seeing these reductions, many believe they are losing customer confidence.
The supply of Bitcoin (BTC) held by major exchanges has fallen to levels that have not been seen in the past two years. The last time BTC's balance on major trading platforms was so low was in 2018, according to data collected on October 20.
People are realizing the value of Bitcoin
The crypto industry grew rapidly throughout 2020 and for a number of reasons. The existing crypto community has been buying with the intention of HODLing since BTC fell for the third time, expecting prices to skyrocket.
Then there was the COVID-19 pandemic, which caused the global economic collapse due to pure fear of what it can do to various sectors. In the end, the world began to realize something that the crypto industry has known for years – BTC is the only asset that offers a solid monetary policy.
At least that's what Nexo co-founder Antoni Trenchev recently noted. He said BTC is the best performing asset of the decade and that the world has begun to realize this.
He added that the community is resorting to self-care solutions, which include platforms such as Nexo itself. These platforms allow tax-saving loans against assets that users already own.
There is no need to sell to win, and all the popularity has generated more discussions about crypto than ever before.
BitMEX and Bitfinex may be losing users' trust
Celsius co-founder Alex Mashinsky expects this state of affairs to continue unless the exchanges change the terms of the deals they are offering in order to lure users back to their platforms.
Not all exchanges are affected equally, of course. Platforms like Binance and Coinbase, which offer good conditions to their users, have kept their funds. Meanwhile, companies like Bitfinex and BitMEX have seen severe reductions in their assets.
The rise of the DeFi sector has undoubtedly contributed as well as the growing interest of institutional investors. They used companies such as grayscale and Microstrategy to accumulate large amounts of BTC throughout the year. Anyway, some exchanges seem to be losing the trust of their users, though not all, as mentioned.
As the customer experience moves more and more online, convenience is becoming the top priority. Consumers are accustomed to next-day delivery and orders from their seats - and are unwilling to compromise these benefits.
When today's consumers venture into the store, they are less happy to queue or wait for a slow transaction to complete than ever before. So much so that they can get completely discouraged if they have to fish a card or enter their PIN. The advent of Apple and Samsung Pay has done little to help in this phenomenon, with customers' devices memorizing payment details for them.
As a result, retailers now have the task of providing a frictionless experience if they want to stay competitive and ensure conversions in this modern and fast-paced world. In addition, as digital payment systems developed, data regulations have also evolved, adding another consideration to retailers' dishes. The system needs to have data security, but without sacrificing perfection.
Ensuring customer safety is essential to prevent retailers from having to deal with unnecessary reversals and refunds, as well as to reduce the risk of a potentially catastrophic data leak. It sounds like a lot, but fortunately, this is not something retailers need to tackle on their own. That's where the right payment provider can help.
More and more retailers are reaping the benefits of tokenization to satisfy this perfect but still secure dichotomy. Let's take a closer look at how tokenization works, the benefits it can provide, and how retailers can implement it.
So what is tokenization?
In a nutshell, tokenization is a system that allows the customer to save their data with a retailer for later use. This means that in the future, whenever you want to buy something with your business, your payment details will already be stored, making the checkout process much more smooth.
On the client-side, they'll see this as a "remember me" button on the web page where they entered their payment details. Behind the scenes, Ingenico will save this raw payment data to protected servers, scramble the actual details into a code, and send the "token" to the retailer. The retailer then links the token to the customer's profile so that, on the next purchase, the customer does not have to enter the card details again.
Tokenization is not limited to the desktop; it can also enable the seamless interaction of an omnichannel shopping experience. For example, if a customer buys something in the store but then calls a call centre to make a return, the call centre can track and refund the purchase using the token generated during the in-store transaction. Or, for a click-and-collect solution, tokenization can allow a store to match a customer with their online purchase by scanning the card details.
As a result, tokenization can help retailers implement stronger fraud management, enabling them to better recognize genuine customers as well as allow them to perform customer analytics across channels.
How can tokenization benefit your business?
We've seen how tokenization allows retailers to store online customer details securely and enable quick checkouts with one click. Another advantage is the data insights it provides, which can help retailers get extra information about their customers and adjust their operations to fit in. This data can help retailers identify the origin and end of the payment journey, for example, or track the percentage of online sales compared to in-store sales.
In addition, the use of tokenization can allow retailers to implement recurring payments and/or subscriptions, so customers don't have to keep asking for something they want to buy repeatedly. It also plays an important role in loyalty and rewards programs for consumers – all valuable information gained from tokenization helps retailers personalize the consumer experience.
The next step is how to implement this. Partnering with a provider with the right payment processing delivery experience, including tokenization, online, through omnichannel solutions, means they know and can help retailers know what customers need as well as scale.
Taking advantage of this means retailers can provide a fast and secure channel payment experience that gives customers the ease of use to make the checkout experience as fast and as easy as possible. It can also improve customer loyalty by encouraging you to continue shopping with the same retailers, using tokenization to provide a smoother and more intuitive customer experience.
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