2018 wasn’t sweet for cryptocurrencies. Bitcoin lost as much as 80% of its value since it has peaked in mid-December of last year. By 2018, regulatory changes dropped the entire crypto market. However, there were certainly points wherein Bitcoin was actually seen stable. For months, it stayed at around $6,200 to $6,500 range only to drop after the Bitcoin Cash hard fork.
There was a point when Bitcoin dropped below $3,500. But it isn’t just the Bitcoin Cash hard fork that caused this. It was quite a number of problems that have accumulated such as regulatory challenges to the decreasing hash rate within the network.
There were a number of crypto critics from Warren Buffet to Nouriel Roubini. The recent drop has even been called by Roubini as a bust while Buffet compared cryptos to rat poison.
And now, UBS Paul Donovan adds to the critics of cryptos. He said that “I come to bury Bitcoin, not praise it”. He added that “These things were never going to be currencies. They’re not going to be currencies at any point in the future”. He even said that cryptos are “fatally flawed”.
In 2017, Donovan was already skeptical about Bitcoin. Though Bitcoin rallied almost to near $20K level though starting only at $1k in 2017, Donovan believes that this is “destructive” in the long term.
Problems That Cryptos Have
There are a number of problems that the crypto market has to deal with. For instance, you have the fact that regulatory clarity is still a problem in different parts of the world. You have China that has vowed to ban crypto-related activities.
You also have the Securities and Exchange Commission to be tracking companies that were using initial coin offerings (ICOs). The agency is now tracking down on companies and even exchanges that are listing tokens that have been considered as unregistered securities. Recently, two companies were made to pay a fine while celebrities such as Floyd Mayweather and DJ Khaled were also made to pay for promoting unregistered securities.
Another issue that has plagued cryptos is the possibility of price manipulation. In fact, SEC Chairman Jay Clayton mentioned that the agency will only be comfortable to approve Bitcoin ETF applications if this issue has been already addressed. For the last months, the SEC has rejected a number of Bitcoin ETF applications including the Bitcoin ETF application of the Winklevoss twins.
And now, since the price of Bitcoin has been down, a good number of miners have already shut down their mining rigs. Because of this, it has decreased the total hash rate in the network even making it hard for Bitcoin to bounce back.
Future of Bitcoin?
So what is in store for Bitcoin and for the crypto market? Mike Novogratz predicted before that Bitcoin may have already bottomed at $6,200 to $6,500. Unfortunately, this wasn’t the case. Now, there’s even a prediction that Bitcoin could possibly hit $2,800.
Will institutional investors be involved by next year? Will this shake things up and create another bull run? Tom Lee even mentioned that we are in the golden age of crypto despite the bearish market.