After a stark plunge Thursday that wiped out $100 billion in market value, the world’s largest cryptocurrency is back near all-time highs Tuesday as corporations like Visa and PayPal join other institutional players in expanding their crypto offerings.
As of 4 p.m. EDT, the price of bitcoin has climbed 2% over the past 24 hours, pushing its market capitalization up to $1.1 trillion–about $40 billion shy from an all-time high on March 13 and pushing gains to roughly $144 billion since a sharp correction on Thursday, according to crypto-data website CoinMarketCap.
‘Analysts are pinning the resurgence to still-booming institutional adoption, including PayPal’s new cryptocurrency checkout service, which launched Tuesday and allows the company’s more than 375 million customers to shop using cryptocurrency at millions of online merchants (PayPal didn’t specify an exact figure, but says the program will expand in the coming months).
Qanda Senior Market Analyst Edward Moya calls the move “another massive cryptocurrency endorsement from Wall Street” and “further proof of mainstream acceptance” just one day after Visa said it will start settling transactions with cryptocurrency partners using a token built on the Ethereum blockchain, which underpins the world’s second-largest cryptocurrency, ether.
Moya notes that bitcoin, which is priced at about $59,080, could struggle to push past $60,000 again but says the recent developments “should be enough to keep the bullish trend going strong.”
Nigel Green, the CEO of $12 billion wealth advisory deVere Group, said in an email Tuesday that growing corporate investments from the likes of Tesla and billionaire Jack Dorsey’s Square are signs that institutions are employing the “buy the dip” mantra popularized by retail investors—meaning they’re loading up on bitcoin when prices plunge.
What To Watch For
Regulation. Though Wall Street is warming up to bitcoin, legendary hedge fund manager Ray Dalio warned last week that he thinks there’s a “good probability” bitcoin could be banned by the U.S. government, similar to how it banned gold nearly a century ago. The Securities and Exchange Commission has been slow to issue regulation for cryptocurrencies.
In an interview with Forbes, SEC Commissioner Hester Peirce said Gary Gensler, President Joe Biden’s nominee to head up the agency, would likely be “sympathetic to the call for regulatory clarity.” When nations like South Korea started cracking down on cryptocurrency three years ago, prices crashed as much as 80% over the course of one year, though it’s unclear how such a development could affect markets today.
Key Background
Bitcoin prices have skyrocketed over the past year amid booming institutional adoption and inflation fears sparked by unprecedented government spending to combat the pandemic. Last week, billionaire Elon Musk tweeted that Tesla would start accepting bitcoin for vehicle purchases and retaining the cryptocurrency tendered, as opposed to converting it to U.S. dollars. Also this month, Fidelity Investments filed an application for its first bitcoin exchange-traded fund, and banking powerhouse Morgan Stanley said it would open up bitcoin exposure to its wealthy clients, though it’s limiting such funds to investors with “an aggressive risk tolerance.”
Surprising Fact
Bitcoin has surged nearly 800% over the past year. Its return of about 96% this year is more than any sector tracked by the S&P 500.
I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com
Chamath Palihapitiya says he sees bitcoin going to $200K down the road, and what he discusses what he believes to be the future for Virgin Galactic. I really believe in the business, he says, it’s an incredible team. Subscribe to CNBC PRO for access to investor and analyst insights on bitcoin and more: https://cnb.cx/2BT2E7y
Bitcoin smashed through $40,000 to hit a new record high on Thursday helping to lift the total value of the entire cryptocurrency market above $1 trillion for the first time. The digital coin hit an all-time high of $40,367 at around 1:17 p.m. ET, just a few hours after blowing past the $39,000 level, according to data from Coin Metrics.
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The privacy-focused cryptocurrency monero, currently ranked as the 11th most valuable cryptocurrency on data site CoinMarketCap with a total value of just under $1 billion, has added almost 5% in the past week—beating bitcoin’s gains.
The precise reason for monero’s sudden surge wasn’t immediately clear, though there have been a number of positive developments for the bitcoin rival over recent months.
Monero developers recently rolled out an update to its Carbon Chameleon software, designed to improve transaction execution and how the cryptocurrency works with the privacy networks Tor and I2P.
Monero and privacy coins have also recently gained support from some high profile figures in the tech and crypto industry.
“I think we’ll also see privacy integrated into one of the dominant chains in the 2020s,” Coinbase’s chief executive Brian Armstrong wrote in a blog post back in January.
“Just like how the internet launched with HTTP, and only later introduced HTTPS as a default on many websites, I believe we’ll eventually see a privacy coin or blockchain with built in privacy features get mainstream adoption in the 2020s. It doesn’t make sense in most cases to broadcast every payment you make on a transparent ledger.”
The monero price has surged over the last week, beating out bitcoin itself as the broader … [+]
Coinbase
John McAfee, the controversial and outspoken antivirus software developer and curve-ball U.S. presidential candidate, named monero as his cryptocurrency of choice earlier this year.
McAfee made similar allusions to monero’s technological superiority over bitcoin.”Bitcoin was first. It’s an ancient technology. All know it,” McAfee said via Twitter before recommending monero to cryptocurrency users.
“Newer blockchains have privacy, smart contracts, distributed apps and more. Bitcoin is our future? Was the Model T the future of the automobile?”
I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com. Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies.
Bitcoin, ETH, XRP, and LTC prices, will be on a roller coaster for a long time. Traders and investors will make and lose fortunes in record time, betting on them. In the end, say some analysts, these cryptocurrencies will either die on their own, or be killed by the ‘establishment’ — big governments and big banks around the world that defend sovereign currencies.
Take the case for Bitcoin.
The “people’s currency” holds a great promise: to become the first true global currency, free of the control of central banks that print money and big banks that generate credit. But to do that, Bitcoin must gain the trust of the “general public.“ This means it must be adopted as a medium of exchange, standard of value, and store of value, replacing national currencies.That isn’t easy, given the many obstacles Bitcoin has to overcome. Like lack of awareness, familiarity, and stability, etc. And that makes some experts bearish about the future of Bitcoin.
Bitcoin Price YTD
Lars Seier Christensen, Chairman of Concordium, the next-generation decentralized world computer, is one of them. “In the longer term, I am bearish on bitcoin as I believe it does not have the necessary characteristics of a longer-term valuable asset and, eventually, that reality will catch up” says Christensen.“But in the short term, price movements will likely be random as Bitcoin is affected by low liquidity and unpredictable bigger trades.”
Unpredictability will make it hard for Bitcoin to gain broad adoption as a medium of exchange. And without broad adoption, Bitcoin will remain a play for speculators and true believers, and eventually die on its own.
But even if Bitcoin overcomes all these obstacles and gains broad adoption by the general public, and was in a position to replace national currencies — ie, become the new currency — what would happen then?
Bears argue that the “establishment” cannot afford to let that happen.
For a couple of reasons, including the loss of Seigniorage” — simply put, the profit made by the national governments by printing currency. Then there’s the profit made by banks helping circulate that money and create credit.
The establishment will do whatever it takes to defend these profits from Bitcoin and any other cryptocurrency that seeks to replace it.
Recent Congressional hearings on Libra attests to the determination of the establishment to protect the dollar from competing cryptocurrencies. In a rare display of unity, Democrats and Republicans opposed Libra, and had many unkind words for Bitcoin.
“Cryptocurrencies that are ONLY there as a currency substitute, however, have no real long-term future,” says Christensen.“They will be outlawed by governments wanting to control the money supply and taxation, and in any case, cryptocurrencies have no intrinsic long-term value of significance. Hence, Bitcoin will only survive as a fringe activity.”
Not everyone agrees with this gloomy assessment, however. Dave Hodgson, Director and Co-Founder of NEM Ventures, is one of them.
“In my opinion, Bitcoin will never die nor be killed by the establishment, despite some people’s efforts to the contrary,” says Hodgson. “The recent drop we have seen in Bitcoin is within the boundaries of what our analysts were expecting from technical analysis. However, the timescale has been slightly skewed in light of recent announcements, primarily from US government representatives.”
Corentin Denoeud, CEO and Co-founder of Blockchain Studio, is another .
“The fact that governments around the world are even talking about crypto is a sign of progress for the blockchain industry in general,” says Denoeud. “While countries such as India have called for the outlawing of cryptocurrencies, representatives from Germany’s Central Bank have responded favourably and advanced the view that cryptocurrencies are not a threat to global monetary stability. Even China, who has previously banned ICOs and cryptocurrency trading, has called bitcoin a ‘safe-haven asset’ (via its state-run media agency) and is now reportedly stepping up its own efforts to create its own cryptocurrency, following Facebook’s unveiling of Libra.”
While it’s still unclear which side is right, one thing is clear: Bitcoin (and ETH, XRP, LTC, etc) true believers who think that cryptocurrency will eventually replace national currencies, need a 101 lesson in Money and Banking.
I’m Professor and Chair of the Department of Economics at LIU Post in New York. I also teach at Columbia University. I’ve published several articles in professional journals and magazines, including Barron’s, The New York Times, Japan Times, Newsday, Plain Dealer, Edge Singapore, European Management Review, Management International Review, and Journal of Risk and Insurance. I’ve have also published several books, including Collective Entrepreneurship, The Ten Golden Rules, WOM and Buzz Marketing, Business Strategy in a Semiglobal Economy, China’s Challenge: Imitation or Innovation in International Business, and New Emerging Japanese Economy: Opportunity and Strategy for World Business. I’ve traveled extensively throughout the world giving lectures and seminars for private and government organizations, including Beijing Academy of Social Science, Nagoya University, Tokyo Science University, Keimung University, University of Adelaide, Saint Gallen University, Duisburg University, University of Edinburgh, and Athens University of Economics and Business. Interests: Global markets, business, investment strategy, personal success.
Jair M. Bolsonaro, the president of Brazil, has recently revealed in an interview with a well-known TV show host that he doesn’t know what bitcoin is, while speaking about his administration’s decision to shut down an ‘indigenous cryptocurrency’ project.
According to local news outlet Portal do Bitcoin, the TV show host has been participating in various cryptocurrency-related events recently, and was speaking to the country’s president about a cryptocurrency-related project barred by Brazil’s Minister of Human Rights, Family, and women, Damares Alves.
Bolsonaro, with a disapproving tone, stated:
She [Damares] discovered at the end of the transition last year that they were earmarking Funai for RS $40 million, and do you know why Ratinho? To teach indigenous people how to mess with bitcoin.
As CryptoGlobe covered, however, the project saw the government sign a contract directly with the National Indian Foundation (Funai) and with the Universidade Federal Fluminense (UFF), instead of seeing organizations compete for it through a traditional bidding process.
At the time, officials claimed the UFF was chosen because of its “expertise” in similar projects. It’s worth noting, however, that Funai employees claimed the work that was set to be done was of “questionable technical relevance.”
Reacting to Bolsonaro’s disapproving tone, Ratinho asked the Brazilian president if he knew what bitcoin was. Bolsonaro replied he didn’t know but with help from the host managed to get a little more out:
It’s that virtual coin. I do not know how to operate that ‘train’ yet.
As Portal do Bitcoin reports, Bolsonaro’s son Carlos Bolsonaro appears to not yet properly understand cryptocurrencies. On the microblogging platform Twitter, he claimed the halted cryptocurrency project blocked “millions in bitcoin,” when in reality it blocked millions in fiat currency.
Bitcoin has outperformed stocks and gold, so far, in 2019.
The digital currency has gained close to 68% YTD, the NASDAQ QQQ Invesco ETF shares have gained 18.09%, the Russel 2000 iShares ETF has gained 15.04%, while SPDR Gold shares have lost 0.08%.
Stocks, Gold, and Bitcoin YTD
Koyfin
Meanwhile, the rest of the cryptocurrency was mixed, with 30 out of the top 100 advancing, and 70 falling over the last seven days.
Table 1
Number of Cryptocurrencies That Advanced/Declined In The Top 100 Ranks
Cryptocurrencies Advance/Decline
Number
Advance
30
Decline
70
Source: Coinmarketcap.com 5/10/19 at 10 a.m
“The worst of the bitcoin bear market is behind us,” says Ian King, senior research analyst at Banyan Hill Publishing, who specializes in cryptocurrencies.
He sees a number of factors driving the Bitcoin rally this time around. One of them is resilience. “In 2017-2018, Bitcoin had a boom and bust, but it’s still here,” adds King.“The November 2018 capitulation was a mirror image of the panic buying of December 2017.”
Market capitulations usually follow bad news, but are signals of strong turnarounds. “All markets bottom when they stop selling off on bad news,” says King. “Two weeks ago, the NYAG claimed Bitfinex was missing $850mm in customer funds. The market sold off and then rallied.”
That’s the 4th boom and bust cycle since Bitcoin’s creation 10 years ago, observes King. “I’m more confident of this recovery than I was of the last, as there are more institutions and retail investors looking at bitcoin as a digital store of value,” adds King.
Meanwhile, Fidelity, Ameritrade, and ETrade are planning to launch institutional trading platforms within the next few weeks, raising market participation.
That’s a bullish sign for Bitcoin, according to King.
But will Bitcoin ever reach $20,000 again? Not in 2019, according to Farrukh Shaikh, Co-Founder and CFO
-Gath3r, LTD. “In the coming few months, it is not very likely at all to go near the all-time high of $20,000. However, 2020 is when the halving occurs for BTC, where mining rewards get cut in half ie reducing future supply,” says Shaikh. “This would be the 3rd halving for BTC since inception, and previous ones have been catalysts for huge price increases for BTC.”
And that could help Bitcoin reach $20,000 by 2021, according to Shaikh. “Speaking from a technical analysis perspective. there are several scenarios where it can reach and surpass the $20,000 price point within the next couple of years,” adds Shaikh.“On a fundamental basis, real world use, adoption and acceptance of BTC is increasing with each passing month, which are also positives for its future price expectations.”
While, it’s hard to predict where the digital currency will be in a couple of years from now, one thing is clear: volatility will continue in cryptocurrency markets.
[Ed. note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment. Disclosure: I don’t own any Bitcoin.]
My recent book The Ten Golden Rules Of Leadership is published by AMACOM, and can be found here.
