In the last few days, a large number of startups active in the field of the so-called cryptocurrencies received funding. The most known out of these currencies, Bitcoin, has benefited by the lion’s share. Top picks of investors were the bitcoin digital wallet Case, the Chain Inc. and Abra. However, what is even more interesting is the participation of NASDAQ Inc. within the group of investors, injecting funds in Bitcoin startups!
Nasdaq CIO, Brad Peterson, believes that a digital platform based on Bitcoin’s blockchain technology may be useful in recording and verifying stock trades. He and his team develop a system, for tracking trades in private companies, that takes full advantage of Bitcoin’s public ledger concept. Yet, Peterson says such a system could also remake stock markets, including Nasdaq!
Following these statements, it makes no surprise that NASDAQ has invested, along with VISA Inc. and Citi Ventures, in Chain’s bitcoin startup. The company provides tools to developers and financial institutes to design, build and operate cryptocurrency blockchain networks to trade and transfer financial assets and smart contracts. Funding reached $ 30 million, which made Chain CEO, Adam Ludqwig, to express his full satisfaction and appreciation.
At the same time, bitcoin startup Abra raised more than $ 12 million in new funding. The app for smart devices the company develops allows users to transfer cash in any currency they desire. Users deposit money through Abra’s app, which is immediately credited on their account and available on their device for remittance in debit of any other user of the platform.
What bitcoin has to do with it?
Well, the moment the app is funded with cash either through money order, or via Abra Tellers (a form of ATM humanoids!), the amount is automatically converted into bitcoins! It will remain on that form for as long as the money is digitally transferred, even though users will see common currencies on their screens! As expected, a number of questions were raised regarding the mechanism Abra would have to adopt in order to cope with the significant volatility of Bitcoin’s price.
Bitcoin volatility and a prediction for Bitcoin
Thankfully Abra and other bitcoin startups were not around in 2013 when Bitcoin’s volatility hit unprecedented levels! At the time, as you may have heard, the price of Bitcoin broke the barrier of $100 before the value blasted over to the $1,000 region in just a few weeks! In the following days thereafter, Bitcoin lost 50% of its value causing a series of… heart attacks to the traders who were found exposed during the fall! Then the market remained in negative territories with a steady decline before we reach 2015, where we observe prices fluctuating between $200 and $300.
On the chart above, I think everyone would note the strong support the price of Bitcoin found on the $200 level. If we look at the left side of the graph, we will see that in spring 2013 this was about the point where Bitcoin met resistance before it rallied into higher prices.
In that sense, I reckon it would be unlikely to see anytime soon Bitcoin being traded for less than $200. It is more likely that the price would break upwards the resistance line of $300 rather than tumbling further south. Besides, with all that positive publicity about the cryptocurrency, as well as the news about the awkward decisions of its competitors that hit the headlines (for instance, Paypal disables payments between Taiwanese users), it would take a complete loss of trust towards Bitcoin in order such a slump in BTC prices to occur. Investors and financial institutions carried on their investment plans on bitcoin startups despite the leading Bitcoin exchange permanently shutting its doors some time ago, and the larger online black market going out of business. Just imagine what will happen if Nasdaq eventually adopts Bitcoin in some of its markets…