Bitcoins price may be evaporating, but Wall Street players are embracing it like never before. The owner of the New York Stock Exchange has begun Bitcoin futures trading, Fidelity is expanding its Bitcoin custody business, PricewaterhouseCoopers is auditing crypto funds, Davis Polk & Wardwell is giving them legal advice, and Marsh & McLennan is helping companies get insurance. All the boldfaced names are on board.

Those developments would seem to be bullish for the digital currency. And yet, Bitcoin has been languishing, and not just in terms of its price, which is down 16% over the past month, to $7,700. The digital currency simply isnt useful, and there is no clear path to it getting there.

There needs to be greater utility, said Adam White, the chief operating officer of Bakkt, the cryptocurrency custodian launched by NYSE-owner Intercontinental Exchange (ticker: ICE). White was speaking at a conference put on by a New York company called BlockWorks Group that aims to educate investors about cryptocurrencies.

Theres an argument that Bitcoin is a store of value, and acts like digital gold, and that is its use case, White said. That may be true. Its our thesis that the size of that pie will never be big enough to justify the aspirations and the opportunities that this technology brings.

A recent survey of crypto and blockchain CEOs and founders connected to venture-capital firm Digital Currency Group came to a similar conclusion about Bitcoins use cases. Of those leaders, 71% expect Bitcoin will mainly be used as a store of value over the next five years, and another 7.6% say it wont be useful for anything.

Bakkt is trying to push Bitcoin into the real world, working with Starbucks (SBUX) to let people pay with it at the register. But even that experiment shows Bitcoins limitations. When the service launches next year, Starbucks wont actually be accepting Bitcoinsoftware will turn it into cash before it hits the companys balance sheet.

Others have similar hopes for larger adoption. Konstantin Richter, CEO of blockchain company Blockdaemon, said at the BlockWorks conference that the biggest impact for all of us would be somebody like Square accepting Bitcoin for payments. That would probably double the price of everything. But Square (SQ) already tried to allow merchants to accept Bitcoin in 2014, before pulling the plug because of a lack of interest. Despite now allowing users of its Cash app to invest in Bitcoin, it hasnt brought Bitcoin back for merchants.

Wall Street has built a robust structure around cryptocurrency. The walls, electricity, and pipes are secure, but the building remains a shell where few want to live. In part, this is simply a matter of timing. The infrastructure had not been there in 2017, when Bitcoin was having its moment, doubling monthly and drawing millions of new retail investors. The washout that followed drove many of those investors out.

There may be no way to convince those investors to crawl back in given the rout they experienced in 2018, when Bitcoin lost 70% of its value. But some fund managers think there is another demographic that will soon get comfortable with crypto.

If you think about the wealth of this country, its in the hands of 50- to 80-year-olds, not 20- to 30-year-olds, said Mike Novogratz, CEO of Galaxy Digital Holdings, a crypto-focused merchant bank. We havent had this group participate in a big way yet.

A Galaxy affiliate introduced two new funds aimed at that crowd in November, with one demanding a minimum investment of $25,000. Fidelity, Bloomberg, Deloitte & Touche, Ernst & Young, and Davis Polk are all on board to track and provide custody for the products. For the first time we can actually create a fund that has institutional service providers, institutional feel, Novogratz said.

Still, one challenge to getting those 50-to-80-year-olds involved is that Bitcoin remains subject to remarkable volatility, with price moves that can be difficult to explain. Optimists say the idiosyncratic moves show that Bitcoin is uncorrelated to the rest of the market. But its one thing to invest in an uncorrelated asset, and quite another to invest in an irrational one.

Despite the pedigree of the firms now backing crypto, Bitcoins drastic price moves continue to rattle the market, including an 18% plunge in a matter of hours on Sept. 24. Explanations for the moves often seem pasted-on after the fact. People do try to reverse engineer it to link it back to an event thats perhaps caused it, says Simon Peters, an analyst with brokerage eToro. He adds that Bitcoins recent weakness has been caused by a lack of demand. Miners are looking to offload Bitcoin on exchanges, but they arent finding enough buyers, he says. Investors may be rattled by Chinas decision to ban many cryptocurrency exchanges.

Even with the recent drop, Bitcoin nears the end of 2019 in stronger shape, its price having doubled since January. In its 10th year of trading, the digital currency hit several significant milestones and drew in major new playersmost prominently, Facebook (FB) announced its Libra project to create a new digital currency that would make payments cheap and easy around the world.

Going forward, it will need a new narrative. Bitcoins most distinctive attribute is that it allows money to be transferred over the internet by people who wish to remain anonymous. Proponents call this censorship-resistance, but it also means that Bitcoin is used to fund things like child pornography rings, blackmail schemes against local governments, and subverting elections. Its no surprise that Bitcoin made several cameos in the Mueller report.

Bitcoin remains an elegant technology, with real potential. But to catch the eye of those 50-to-80-year-olds who havent yet invested, it will need a clearer purpose beyond just Wall Streets approval.

Write to Avi Salzman at avi.salzman@barrons.com

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Bitcoin Has Wall Streets Love. But a Lack of Utility Means It Doesnt Have Investors. - Barron's