While skeptics continue to wish for the bitcoin bubble to burst, the high-end cryptocurrency continues to rise to new heights seemingly every day. For example, in the same week that Tesla announced its invasion of the cryptocurrency market, bitcoin (BTC) rose nearly $10,000.
And while the market then underwent a correction when news broke that BNY Mellon, the oldest private bank in the US, had joined the cryptocurrency, it sent the largest digital currency by total market capitalization back on an upward trajectory.
So the banking giant, which manages $2.2 trillion in assets and holds or manages $41.1 trillion in assets, has announced it will hold, transfer and issue bitcoin and other cryptocurrencies as an asset manager on behalf of its clients, potentially opening up the asset class to a whole new group of investors.
Another reason for the current momentum could be payment giant Mastercard’s decision to allow its user base to use crypto assets through its 30 million merchants. In addition, PayPal announced on February 11 that it is looking to expand its recently launched cryptocurrency offering into the UK market. In addition, Venmo, the company’s mobile services subsidiary, revealed plans to launch digital asset services for its 29 million users in the coming months.
What does BNY Mellon’s entry into the market mean?
BNY Mellon reportedly wants to start managing cryptocurrencies through a platform that is currently in the prototype phase. In this regard, it has also been reported that the system will also be able to handle a wide range of traditional assets, such as government bonds and equities.
It also appears that the financial institution has not determined for which crypto assets it will offer custody services. In addition, BNY Mellon has already deployed a management team led by Michael Demissie to accelerate the integration of cryptocurrency storage and management into the bank’s existing product line.
Speaking to Cointelegraph, Hank Holland, founder and managing partner of private equity firm Pegasus Growth Capital and former managing director of Merrill Lynch, found that as an established and trusted private bank and one of the largest custodians for registered investment advisers, BNY’s commitment to holding digital assets is a necessary and deliberate step towards greater acceptance and adoption of BTC and other crypto assets by investors:
The strategic initiative addresses two key barriers. First: For the average investor who does not wish to manage a private key, BNY’s custody solution provides a trusted point of contact for the BTC holder. Second, for a financial advisor to recommend marking up BTC and digital assets, the investment must be made on their platform. This allows them to charge a consultation fee.
According to Holland, the first transaction for most BNY clients will be to buy BTC to actively include it in their overall strategic allocation outlook. However, clients’ initial purchases may be followed by further investments in an actively managed portfolio of various digital assets, as well as credit and business strategies to supplement their regular income.
Marcos Benítez Rubianes, account manager at Gazprombank, told Cointelegraph that the news confirms the growing global adoption of bitcoin, the oldest and most liquid crypto asset in the traditional financial system:
We’ve seen a cascading effect since Paypal announced the integration of cryptocurrency trading into its platform. Today, in 2021, you have one of the world’s most valuable companies, Tesla, buying BTC for its balance sheet on one side, and America’s oldest bank offering services in bitcoins to its customers on the other.
Moreover, Rubian believes that in the near future, more traditional players will start to consider bitcoin as an asset, perhaps even as a means of payment, especially as their customers will feel the need to follow suit and pressure these institutions to give them more cryptocurrency exposure.
Is the rise of bitcoin a done deal?
As bitcoin begins to approach the $50,000 mark, it is worth asking whether a rally is in the offing. Antoni Trenchev, co-founder and managing partner of Nexo, a cryptocurrency exchange and lending service, told Cointelegraph that it’s one thing for a tech company like Tesla to accept BTC, but it’s a whole different ballgame when the oldest lender in the US does so, adding: Generational conflicts are always fascinating to watch. Banks that follow suit, and there will inevitably be many, will simply be second rate.
Rubian believes a new surge is on the way as more and more financial executives make the move to incorporate cryptocurrencies. If that happens, interest in the space could increase tenfold, he thinks. Players in cryptocurrencies are well aware that one of the biggest barriers to cryptocurrency adoption is, perhaps ironically, self-protection, he added.
But not everyone shares this opinion. Alexander Sukhobokov, head of fintech at Dukascopy Bank in Switzerland, told Cointelegraph that while the gradual integration of the crypto and traditional financial industries is ongoing, and banks that fail in the next year or two face a real risk of losing their competitive edge, it is highly unlikely that this news will have a serious impact on BTC :
It is much more likely that the value of BTC will come under severe pressure from the external influence of regulatory decisions on USDT. Let’s hope this potential turmoil doesn’t undermine the potential of crypto.
So what can we expect from bitcoin?
After BNY, Mastercard and PayPal promised to take a closer look at the cryptocurrency landscape in the near future, Twitter – home of Jack Dorsey, the man behind financial services provider Square – recently confirmed that it would offer its employees the option to be paid in bitcoin.
In addition, Ned Segal, CFO of the social media giant, said that the company is exploring the possibility of adding BTC to its existing assets. However, he believes a lot will depend on how many people are interested in doing business in BTC with a technology company.
Finally, Daniel Pinto, co-chairman of JPMorgan Chase, the largest US investment bank, said in a recent interview that the company will have to get into bitcoin at some point: There is no demand yet, but I am sure it will happen eventually, he added.
Overall, looking at sentiment in the space, there seems to be growing confidence that BTC can break through the important psychological barrier of $50,000, especially as the first cryptocurrency manages to successfully counter the bearish momentum that has taken the digital asset to $46,110 over the past 24 hours. As a result, BTC is back comfortably around $48,000.