Cryptocurrency Markets–Despite 2018 being a near-continuous bear cycle for cryptocurrency, the past three days have brought a significant amount of wealth back into the industry–giving investors a short glimpse of hope that the relative bottom might have been reached.
Since peaking at an all time high of 830 billion USD in the first week of January, the cryptomarkets have been in steady declining, shedding 67% of their value over the first six months. June looked even dire for investors, as all coins plummeted to their relative low this past week, with the market reaching 234 billion USD for the first time since last October.
While most investors cautiously await the performance of the market, the major currencies in the industry have all posted significant gains in the last several days, clawing back into the green for the first time since nearly the end of last year.
Bitcoin has had to contend with recent news over the failure of Lightning Network to perform consistently in transactions of larger value, but the currency is showing strength among community perception and in the willingness for investors to hold their coins through the falling price. Despite CNBC’s Crypto Trader predicting Bitcoin to test 5300 USD levels, other bullish proponents for the currency have been adding their two-cents to the dialogue. Bitmex co-founder Arthur Hayes recently made the prediction that Bitcoin would achieve 50,000 USD this year–fulfilling similar predictions made for the currency in the midst of last year’s bull run–citing the history of cryptocurrency volatility and price swings as being nothing new to veteran investors,
“something that goes up to [around] $20,000 in one year can have a correction.”
Hayes does contend that a bottom could form much lower than current prices, but highlights the fact that cryptocurrency is teetering on a precipitous edge of adoption. One small regulatory change or positive announcement could be the push needed to send the currency exponential once again,
“We could definitely find a bottom in the $3,000 to $5,000 range. But we’re one positive regulatory decision away, [maybe] an ETF approved by the SEC, to climbing through $20,000 and even to $50,000 by the end of the year.”
This time a month ago, few high-profile investors or industry figures were venturing any positive predictions for cryptocurrency in the near future. That is slowly beginning to change, with the announcement of several hedge funds venturing into crypto despite the recent price-lows.
Ryan Rabaglia, head trader with Octagon Strategy, echoed the comments of Arthur Hayes in an interview with CNBC, saying more clear market regulations would pave the way for cryptocurrency growth. The current state of the industry, without regulation or even a green-light for future regulation, has created a buffering uncertainty for professional and institutional investors. Until that barrier is removed, big-money players from Wall Street and around the world are more content to stand on the sideline, even as average investors continue to enjoy double to triple-digit gains.
While regulation has long been antithetical to the decentralized ethos of cryptocurrency, a more clearly defined legal understanding of dealing in crypto, from everything surrounding exchange operation to tax collection, could go a long way in inspiring confidence in financial institutions looking to guard against the downside of crypto investing. With both Hayes and Rabagalia remaining bullish on cryptocurrency in the event of greater regulation, it’s worth considering the impact upon market prices and industry growth.