Bitcoin has continued to rise this year, gaining a foothold in the U.S. stock market. Bitcoin is now being seen as an option for those seeking to diversify their portfolios and see a possible risk attached due to its volatility and lack of regulation over it.
One of the most popular digital currencies, Bitcoin, is slowly getting mainstream stocks that allow people to buy them with bitcoins. For example, recently, NASDAQ with Second Market will allow investors to trade Bitcoins as exchange-traded funds (ETFs) though it is still in the testing stage.
The price of Bitcoin rose to the year’s highest on Wed, Dec 16th reaching $465.45 at 4 p.m., according to the CoinDesk Bitcoin Price Index (B.P.I.). The digital currency has surged about 74% since hitting a low this summer below $230. Stocks are also doing good now, with the S&P 500 reaching a high this year.
6 Positives of bitcoin that impact U.S. stock market
As the price of bitcoin is soaring high, there are more chances to invest in the stock market for everyone. Here are some facts which affect the U.S. stock market:-
1) A group of Israeli hi-tech veterans recently launched a new platform that will allow public trading of shares in companies using digital currencies such as bitcoin. For more information, visit investing in cryptocurrencies.
The co-founder and chief executive of the new company, D.A.G., focused on crowdfunding ventures using digital currencies, said, “If you want to attract the best investors and entrepreneurs from around the world — regardless of their geographic location — offering shares in your company in exchange for virtual currency is a great way of doing that.”
2) In addition, bitcoins are being accepted as a form of payment in countries from Japan to the U.S. In Florida, the U.S.A., an individual recently sold his house for bitcoins, and many mainstream businesses such as dating site OkCupid and blogging platform WordPress also accept it.
3) Bitcoins are being used in places like the U.S., Canada, and Europe to purchase everything from pizzas to camera equipment to illegal drugs.
4) The relative anonymity afforded by virtual currencies appealed to drug dealers, who have been among the most active users of bitcoin for some time now, according to a recent paper written by a Carnegie Mellon scholar. In addition, an October 2014 Hired report showed that one in ten employers have already interviewed candidates who use Bitcoin for their Payroll.
5) Many libertarians and individual investors are excited about Bitcoin’s potential as an alternative, nongovernmental currency. They reportedly purchased about 1% of all bitcoins in circulation and invested heavily to promote it across Wall Street.
6) People quickly turn to bitcoin to avoid hyperinflation or devalued currencies, especially in Greece, where its citizens are limited to withdrawing only 60 euros ($66) per day from their bank accounts.
3 Negatives of bitcoin that affects the U.S. stock market
Bitcoin has some adverse effects on the U.S. stock market, though it might temporarily. Here are some reasons:-
1) The price of bitcoin seems to have been quite volatile since its inception, and this is likely because the market is young and not very liquid. In addition, there have been several hacks of bitcoin exchanges and other high-profile security breaches that have caused the price of the cryptocurrency to plummet.
While this volatility has diminished in recent years, it remains too big of an unknown for many investors.
2) The digital currency also faces scrutiny from regulators trying to keep a good hold on every transaction done with bitcoins. This is not only to keep track of possible illegal activities but also to worry about the effects virtual currencies might have on economies if left unchecked.
For example, authorities in Russia recently ordered the closure of a Moscow-based website that allows users to purchase bitcoins using Russian currency.
3) Lastly, virtual currencies are generally not considered legal tender and, therefore, lack the protection and stability of a government-backed currency. This can make it difficult for bitcoin to gain widespread adoption in some countries.
So, the conclusion is that investors cannot ignore bitcoin as a digital cryptocurrency as its market cap is continuously increasing. As more and more people are using it, the value of bitcoin will increase in the future. Therefore, the U.S. stock markets should also consider investing their money to get the maximum benefit from it.