TD Ameritrade is a huge trading platform that allows the exchange of multiple financial assets, including cryptocurrency. Recently, the financial giant interviewed a CoinDesk representative about the benefits of Bitcoin and the Bitcoin price. Typically, large financial institutions do not take crypto news outlets seriously and prefer to focus on fiat currency news and larger economic events. This was a first for the company.
In the interview with Noelle Acheson, she was asked a number of questions. One was what’s causing the current Bitcoin selloff in light of the fact that the network fundamentals have never been stronger, and another was what could potentially cause the Bitcoin price to increase. In response, she stated that:
“Bitcoin has selloffs because it is less liquid than gold is. It also has a steady stream of new bitcoins coming into the market so unless new demand comes in there is going to be downward pressure on the price.”
“It will trade stable until it doesn’t. And then the narrative will become self-fulfilling. The narrative becomes about the price…But the price is not the story today, the fundamentals are the story, and that will increase the acceptance and understanding of this new asset class.”
When asked about the Bitcoin price and why it wasn’t higher given the strong fundamentals, the Coindesk representative replied, “We are investing in it because it will be a store of value tomorrow, not today”. She has faith in the technology, like many others, as a means of displacing a corrupted financial infrastructure.
The last point is quite significant. While the Bitcoin price is suppressed with futures contracts, the time may be coming where the fundamentals become more important than the exchange volume. Year upon year, the Bitcoin fundamentals have been improving.
Transaction costs are lower. Transaction times are quicker. The network if more scalable. The hash rate is at an all-time high, and adoption has increased every single year as it gets more and more robust. Apart from 2015, every year saw a higher low.
The number of Lightning Network nodes is now over 10,000, and this second layer solution is going to underpin the future of Bitcoin transactions. Such strong fundamentals further imply that the network has huge upside potential in the long-term. While the price can be manipulated in the short term, this could prove harder to do on a longer basis.
A more interesting question is why TD Ameritrade is deciding to promote Bitcoin at this moment. It comes at a time when Alibaba and the Chinese government are also warming to Bitcoin despite prior statements.
6 Months ago, TD Ameritrade decided to launch Bitcoin futures contracts on its platform. The Bitcoin price may be dropping, but both the fundamentals as well as institutional and national statements are at all-time highs. Perhaps the Bitcoin price is being hammered as low as it can go so that certain actors can get in on the game.