Despite getting a healthy dose positive news over the past couple of weeks, none of it has been enough to boost the price of Bitcoin above $10,000, so far.
However, a few events are happening that could boost it to that psychological price, if not over it significantly.
One of them involves the Intercontinental Exchange (ICE), which is the parent company of the New York Stock Exchange. Multiple reports surfaced Tuesday saying ICE is launching a trading platform that would allow investors to purchase Bitcoin.
The reports started circulating Monday afternoon (New York time).
Why is this important?
You’ve heard endlessly about Bitcoin naysayers shooting down its legitimacy. The idea has always been that once more traditional, big-name Wall Street firms got involved, the crypto’s reputation as being legitimate would improve.
The structure would entail swap contracts. These contracts would be settled with actual, “physical” Bitcoin placed in the customer’s account. That means that Bitcoin would be available at settlement, which could be as soon as the next day.
That’s different from CME and Cboe trades that are ultimately settled in cash.
The news comes on the heels of Goldman Sachs announcing last week that it would be opening a cryptocurrency trading desk. It also hired a head of digital assets trading to run it.
Now current traders and investors are wondering if these two actions, if ICE’s plays out, mark the beginning of widespread adoption of cryptos.
The custody question
Bitcoin enthusiast Brian Kelly said he was “very, very excited” upon hearing the possible launch by ICE.
“I was a little shocked that the market didn’t pick up on this.”
His excitement relates to the physical delivery of Bitcoin that ICE’s plan could provide. Kelly noted that ICE could provide a custody solution, which has been a big hurdle.
“How do you hold on to these instruments? These are generally bearer instruments, just like you have bearer bonds, so you have a third party custody person. So that’s the big deal.”
Once that custody solution is in play, cryptos begin to look like they are becoming an emerging asset class, according Kelly.
This opens the door for a huge sector of investors - those related to pensions and endowments, he noted.
“Up to this point, it’s been very difficult for them to get comfortable, compliance-wise, in holding cryptocurrency. If ICE has a custodial solution that is SEC-quailed that fits with their compliance, that’s going to open the flood gates.”
Just a small amount of capital flowing into this could create some big price moves, Kelly said.
Kelly attributed Tuesday’s market sell off to people not understanding the positive impact of a potential custody solution ICE could provide.