CNBC Analyst and Capital founder Brian Kelly attributed the recent surge of Bitcoin price to the rising demand of institution investors toward Bitcoin.
An increasing number of investors and traders have begun to recognize Bitcoin as a long-term investment, store of value and settlement network, rather than as a short-term investment or “hot money,” as Kelly described.
Investors looking to trade Bitcoin for Japanese yen
In particular, the Japanese Bitcoin exchange market and industry have matured significantly over the past few months, to the point in which the country’s largest financial institutions and corporations have started to launch digital currency exchanges and trading platforms.
SBI Group the $3 bln financial conglomerate based in Tokyo, recently established SBI Virtual Currencies, to create a secure and efficient ecosystem for investors looking to trade Bitcoin for the Japanese yen. Another multi-billion dollar Internet company in GMO Internet has also announced its plans to launch a Bitcoin exchange within this year.
A representative from SBI Group told a local publication:
"We didn't even have minimum guidelines [back in 2014, when the Bitcoin exchange Mt. Gox collapsed,] so users will now feel more secure.”
Major alteration in mainstream perception of Bitcoin
The SBI Group representative further emphasized a major alteration in the mainstream perception of Bitcoin as a legitimate digital currency, primarily due to the Japanese government’s legalization of Bitcoin as legal tender.
Also, a large factor that has convinced institutional investors to invest in Bitcoin is the elimination of tax requirements for Bitcoin. Countries such as Japan and the Philippines have completely legalized Bitcoin as legal tender and are set to drop any relevant taxes for Bitcoin traders and investors.
"The biggest driver right now is you're starting to see institutional investors take a keen interest in the entire sector. I don't think this is hot money. This is real money that's going to sit around and build the new Internet."
According to CNBC, Kelly reaffirmed that Bitcoin price strengthened over the activation of Segregated Witness (SegWit) on Litecoin and the community’s optimism toward SegWit activation on Bitcoin.
Scaling solution first, to the moon after?
Recently, Bitfury vice executive chairman George Kikvadze revealed that high-profile investors are delaying “massive investment” in Bitcoin and its businesses due to the digital currency’s lack of scaling solution.
Upon the activation of a scaling solution, whether that be SegWit, Bitcoin Unlimited or Extension Blocks, investors will be willing to invest in Bitcoin with flexibility and full confidence.
“Just finished a two-week roadshow with investors. Message: we love Bitcoin but need to sort out scaling before we massively invest [in Bitcoin.] Activate SegWit!,” said Kikvadze.