Investing.com – Bitcoin rallied Thursday, riding a wave of red-hot demand as U.S. regional bank giant BNY Mellon (NYSE:BK)’s foray into cryptocurrency pointed to signs that the era of widespread corporate adoption is near.
Bitcoin jumped 7.3% to an all-time high of $48,555.
BNY Mellon unveiled plans to store and issue bitcoin as well as other cryptocurrencies on behalf of its clients. The bank’s hand was forced by growing client demand for digital assets at a time when improving regulatory clarity and a developing ecosystem has paved the way for wider institutional adoption.
The bank has set its sights on eventually allowing its crypto assets to flow through the same financial network used for traditional asset holdings like U.S. Treasuries and stocks.
The backdrop of improving liquidity has also offered a semblance of comfort for institutional purchases of bitcoin. In prior years, bitcoin whales – those with significant amount of bitcoin – had the power to move the price of bitcoin, but in the wake of growing order books that bolsters liquidity, the large ‘hodlers’ of the popular crypto hold less sway.
“Liquidity comes from order books … Large block trades of bitcoin would have easily moved the market not too long ago, [but] that has changed because there’s institutional players who are buying and selling bitcoin, [adding] depth in to the order books,” David Wachsman, CEO and Founder of Wachsman said in an interview with Investing.com.
“Institutional purchasers of bitcoin, who before were worried that if they went in, they might move the market, or if they ever had a position to sell, they might do the same – now have a lot more comfort as there’s substantial liquidity in the market,” Wachsman added.
BNY Mellon was not the only major institution to make the leap into bitcoin this week as Mastercard (NYSE:MA) also threw its support behind the popular cryptocurrency following in the footsteps of Tesla (NASDAQ:TSLA) and MicroStrategy Incorporated (NASDAQ:MSTR).
The entry of major companies into cryptocurrency marks yet another sign that this latest rally differs significantly from retail-driven melt up in 2017, and signals a trend that is in the early innings.
“In my view, the next major validation of crypto and in particular the BTC as an asset class is likely to be a swarm of public limited companies (PLCs) filing with the SEC–like Tesla and MicroStrategy–after attending Michael Saylor’s recent conference and open sourcing of the MicroStrategy Bitcoin treasury playbook,” said Dave Hodgson, CIO of NEM Group.
“It was a visionary step, and very refreshing to see a PLC embrace the open source advantages of an ecosystem and the network effects.”
Source: Cryptocurrency - investing.com
