BAKU, Azerbaijan, January 31. Institutional adoption provides staying power for Bitcoin, and likely will result in more price stability on average, Jennifer J. Schulp, director of financial regulation studies at the Cato Institute’s (American libertarian think tank headquartered in Washington, D.C.) Center for Monetary and Financial Alternatives, told Trend.
“We’ve already seen a shift in sentiment since November, when Trump was elected, with Bitcoin’s price soaring since that time. The recent Trump Executive Order, reaffirming his commitment to digital assets, continues to support positive investor sentiment. It’s too early to predict the impacts of any regulatory policy changes, but the shift towards a more digital-assets friendly U.S. approach lends support to the global markets and likely portends increased demand for Bitcoin. Institutional adoption provides staying power for Bitcoin, and likely will result in more price stability on average, by and large bringing more predictability into the market,” she said.
Schulp pointed out that it’s not clear, though, that institutional adoption will lead to the increased use of Bitcoin as an alternative currency, as opposed to a store of value.
“I see institutional adoption as further cementing Bitcoin as a commodity store of value – useful for holding wealth, but not something that is going to change hands to complete day-to-day transactions.
Some view Bitcoin as providing a comparative advantage to fiat currencies when held in reserve because Bitcoin allows the reserve to potentially be insulated from the sanctions power or economic instability of the fiat currency issuer. But a national reserve’s make-up is not just a function of holding insulated wealth; it is also a function of the trading and other relationships that the country holds. It’s a much more complicated question of international trade and international relations than simply choosing to hold Bitcoin because it is potentially more insulated, especially where the dollar remains the world’s reserve currency,” she concluded.
Follow the author on X: @Lyaman_Zeyn