By Anthony Wallace/AFP/Getty Images.

Throughout 2017, the price of bitcoin rose stratospherically, driven by a volatile cocktail of surging amateur interest in cryptocurrencies, professional price manipulation, rampant speculation, and techno-utopianism. By the end of last year, a single bitcoin was selling for more than $20,000—a twentyfold increase over its price at the beginning of the year. Other, lesser-known coins also surged in popularity, bidding up competitors like Ethereum and Litecoin to multiples of their starting prices, and minting untold crypto millionaires. More recently, however, the bubble has popped and the euphoria has faded. Facing a number of obstacles, including the continued threat of regulation in countries around the world, the value of bitcoin has slumped. As of Friday, bitcoin was trading at just under $6,000 per share—its lowest level since November, down $1,448 or almost 20 percent from last month, and far below its December peak. True believers are holding on, but skeptics say the jig is up.

To hear at least one influential financier tell it, bitcoin’s most euphoric days may be behind it. “I don’t think you get all the way back to $20,000, but I do think that you need to establish a base whereby the people who really believe in the future of bitcoin consolidate and then that provides you a lift,” Mohamed El-Erian, the chief economic adviser at Allianz, told CNBC. Short of something to spark excitement in the cryptocurrency, Matthew Newton, an analyst at eToro, told CNBC that there’s nothing boosting its price, though he said it’s not usual for bitcoin prices to dip. “There’s no real spark in the market right now to get it moving, it’s just more sellers than buyers,” Newton said. “It needs something to get markets back to life, like some development on the technology or regulatory side.”

Bitcoin skepticism isn’t unwarranted. Last week, Japan’s financial regulator asked several cryptocurrency exchanges to improve their safety practices against money laundering, and bitcoin prices dropped nearly 9 percent shortly thereafter. South Korea-based cryptocurrency exchange Bithumb temporarily suspended withdrawal and deposit services last week after it was hacked and $30 million in its coins were stolen; earlier this month, another South Korean cryptocurrency exchange, Coinrail, lost more than $40 million in tokens after it was hacked. Meanwhile, in the U.S., regulators are reportedly investigating potential price manipulation at four major cryptocurrency exchanges. A Wall Street Journal report about the investigation was followed by a broader cryptocurrency sell-off earlier this month.

Buried within this harsh reality, however, are seeds of hope for bitcoin believers. One of the biggest knocks against cryptocurrencies has been that they are too volatile to serve as reliable stores of value, or as a means of exchange. Why buy goods in bitcoin if they could plunge in value tomorrow? If bitcoin’s new price is realistic, reflecting a more accurate assessment of its fundamental value, then perhaps this year’s correction could put bitcoin on track for more mainstream adoption. Price swings are fun for speculators, but of no use to ordinary people trying to purchase T-shirts (or drugs, more likely) online. El-Erian, for one, suggests that bitcoin is near the point where buyers will step in to prop it up if the price falls any lower—below $5,000, for instance. Peter Smith, the C.E.O. of Blockchain Ltd., echoed El-Erian: “You’ll have to see the market reverse before you see” institutions rush in, he told Bloomberg Television this week.



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