It may take years before Bitcoin makes any noticeable dent in
Citigroup’s profits, but Bitcoin’s existence alone raises some
uncertainty about the future of such financial institutions and their
profit margins. Some players like Western Union have already been forced
to drop their fees drastically in response to Bitcoin’s extremely low
transaction fees.
The question is where does all that money pulled out of the stock
market will go? Many investors like Kevin O’Leary publicly said that
they’ve put a few percents of their money into Bitcoin already. His
Bitcoins were without a doubt his best performing asset in 2013. It’s
likely that most billionaires pulling out of the stock market will put a
small part of their wealth into crypto currencies as it’s highly
independent from other assets which is important for healthy
diversification.
Let’s just see how much money are we talking about. Let’s assume only
a fraction of those stock dollars will be funnelled into cryptos. Half
percent of NYSE’s total market cap is 83 billion dollars.
If 70% of that 0.5% would flow into Bitcoin it would increase BTC’s
market capital 7 fold raising the price of Bitcoin to over $5,000. If
10% of it went to Litecoin it would increase LTC’s market capital by 13
times raising the price to $325. And we’re talking about just 0.5% of
one stock exchange in the world.
Potentially it is also possible that the crash of stock market prices
will scare crypto currency investors too. Although, it’s hard for me to
find a plausible reason why this would happen.
It will be interesting to see how the predicted decline in the stock
market will influence the valuation of the popular crypto currencies.
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