Looking forward, the long-term outlook remains bullish with technical charts calling a rise to $10,000, according to CNBC.
But Facebook’s latest move serves to legitimize the space in a way that could provide a further runway for bitcoin, which could even become a “reserve currency in crypto”.
Facebook’s project has the backing of payment processors Mastercard and Visa, as well as travel giant Booking Holdings, among others.
Libra’s promise and backlash
Facebook published a white paper unveiling more details on Libra and its 2020 rollout, and also launched Calibra, a subsidiary company that will protect user privacy and ensure transaction data stays separate from Facebook data, as per TechCrunch.
Libra will enable global commerce and peer-to-peer (P2P) payments at little to no cost. Users can spend Libra through third-party mobile wallets or a Calibra wallet, which will be built into Messenger and WhatsApp, said Business Insider (BI).
Facebook VP of blockchain product Kevin Weil told Business Insider that Libra could evolve into more sophisticated financial products, like credit.
The Libra Association of potentially over 100 members of the most highly branded companies globally is ensuring price stability — “which means the crypto could catch on with merchants while threatening remittance firms on cross-border transfers” explained BI Intelligence.
Libra addresses pain points like price volatility, as it will be pegged to a basket of global currencies and aims at becoming cheaper, more accessible to the unbanked.
Libra is intended to make sending money as easy as sending a message in Messenger, with Facebook bringing to light the average 7% fee that remittance firms charge to send money abroad as something Libra is addressing, as legacy firms and digital upstarts begin to anxiously take notice.
“Libra's already facing backlash from European lawmakers — which means its launch could be an uphill battle. Within hours of Facebook's announcement, authorities from France, Germany, and Italy expressed concerns with Libra and its implications on illegal activity or its ability to be regulated,” BI Intelligence said.
“The social media giant already counts 2.4 billion monthly active users, while attracting the likes of Uber and eBay gives Libra access to these platforms' user bases — a powerful combination that could ignite adoption. Facebook says $25 billion is lost by migrants each year on fees to companies like Western Union. By offering substantially cheaper alternatives to these established players, Libra can disintermediate incumbents and fintechs and reshape their role within the industry.”
Tom Lee said: “One thing to keep in mind [is] Facebook’s annual revenue per user is probably $50. That might be a little high,” Lee said. “But an average bank generates close to $1,000 per user. So, Facebook has a 20x upside to their customer model if they start doing banking services, and so I can see why banks aren’t really enthusiastic about this.”
“I think bitcoin ultimately becomes a reserve currency in crypto, Bitcoin at $9,000 has only been at this level in 4% of its history.. I think bitcoin is easily going to take out its all-time high,” said Lee.
Lee’s optimistic projection of bitcoin comes after the asset recorded a 113 percent increase in value since April within a two-month span from $4,310 to $9,200.
Bitcoin is up well over 100% in the past two months (source: coinmarketcap.com)
Barry Silbert, the CEO of Digital Currency Group, a leading venture capital company in the crypto sector said Libra may become the single biggest catalyst of crypto asset.
“The launch of Facebook’s cryptocurrency will go down in history as the catalyst that propelled digital assets (including bitcoin) to mass global consumer adoption. Will be remembered as just as important — and transformative — as the launch of the Netscape browser. Buckle up,” Silbert said.