Bitcoin prices jumped higher on Monday amid a broad stock and commodity market sell-off, as investors search for safe havens from the international trade wars. Bitcoin hasn’t been a very effective safe haven so far in 2018, but bitcoin bulls say the same regulators that have spooked the market this year may ultimately end up as bitcoin’s best friend.
Bitcoin traded up 4 percent on Monday morning, but it’s down over 50 percent year-to-date and 66 percent from its all-time high in December 2017.
[See: 5 of the Best Stocks to Buy for July.]
Investors have headed for the hills in 2018 as regulators around the world have cracked down on cryptocurrencies. Volatility and trading volume in the BTC market has also died down, suggesting the frenzy that accompanied bitcoin’s meteoric rise in 2017 has passed.
Bitcoin has plenty of high-profile critics, but bulls aren’t deterred by weaker bitcoin prices in the first half of 2018.
“I think it’s more interesting to remember where we came from in this market, and year [on] year we’re up well over 100 percent,” Octagon Strategy head trader Ryan Rabaglia said on CNBC Sunday.
Rabaglia says the same regulatory uncertainty that has pushed bitcoin prices lower in 2018 will work in bitcoin’s favor in the long term. Until regulators can set clear rules and regulations guaranteeing investor safety, deep-pocketed financial institutions will be hesitant to buy cryptocurrencies.
“Once we actually establish that regulation, the professional and traditional players that are going to be entering the market … are going to get that support from regulators,” Rabaglia said.
The U.S. Securities and Exchange Commission has yet to approve a cryptocurrency exchange-traded fund for trading on a major U.S. exchange out of concern for investor safety. In April, the SEC said it was reviewing a potential rule change that could open the door for bitcoin ETFs in the future.
In the meantime, Allianz chief economic advisor Mohamed El-Erian said last week that bitcoin prices may finally find long-term support at the $5,000 level.
[Read: The Best Bitcoin Wallet of 2018.]
“I don’t think you get all the way back to $20,000, but I do think that you need to establish a base whereby the people who really believe in the future of bitcoin consolidate and then that provides you a lift,” El-Erian said.
The Bitcoin Investment Trust ( GBTC), which trades on the OTC market, is down more than 55 percent year-to-date.
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Regulations May Drive Bitcoin Prices Higher originally appeared on usnews.com
