In a recent week, Bitcoin, along with other cryptocurrencies such as Ether, Ripple and Bitcoin Cash, experienced a drop of some 30 percent. Moreover, the total value of all publicly traded cryptocurrencies hit a total of some $276 billion on Tuesday, which is down 57 percent compared to the market’s all-time high of $830 billion in early January.
BITCOIN PRICE DIP PART OF REGULAR CYCLE OF MARKET CRASHES AND SURGES
Although Bitcoin reached an all-time high of some $20,000 in mid-December, the most popular cryptocurrency has been continuously falling since then, tumbling down to $6,000 on Tuesday before slightly recovering to over $8,000 earlier in the day. The fall of cryptocurrencies has been largely triggered by efforts of China and South Korea to curb the cryptocurrency trading, as well as regulatory moves of major world banks, including Bank of America, JP Morgan, and Lloyds Banking Group, to ban cryptocurrency transactions.
He argued that the increasing regulatory recognition of cryptocurrency exchanges, the entrance of institutional capital and major technology developments would contribute to the market's rebound and push cryptocurrency prices to all new highs in 2018.
His view was shared by Charles Hayter from the Crypto Compare cryptocurrency data analysis firm, who deemed Bitcoin’s large short-term correction "healthy."
"Bitcoin was due this correction and this is healthy for the ecosystem in that it didn’t go any higher. The regulatory moves are quelling the irrationality of the market and will bring rigor and long-term stability. This is how nation states buttress themselves and their financial systems against the nature of cryptography and virtual world of the internet," Hayter explained.
BANKS SHOULD QUIT HOSTILE APPROACH, ENSURE TRANSPERENCY
Restrictions of several banks worldwide aimed at limiting credit card purchases of cryptocurrencies can be seen as a refusal to take pains to actively work with cryptocurrency exchanges to ensure more transparency on fiat transactions, according to Glucksmann.
"Established banks have never fully endorsed businesses and individuals exchanging or transacting with cryptocurrencies, so these announcements will not have any major impact on the market. I believe many of these banks are choosing a hostile approach to cryptocurrencies as it is an easier target than the monitoring [of] the money laundering and criminal financial activities that takes place through their own banking networks with the USD," Glucksmann argued.
He went on to explain that the traceability of cryptocurrency transactions and sophistication of today's cybercrime agencies "makes it very difficult to be a crypto-criminal."
"The credit card blocking was a sensible move — allowing people to buy speculatively on a loan has had historical precedence for being imprudent and adding fuel to the fire. What we have is a lot of businesses and capital — human and financial, ICO's aside, looking to make this work that can see long-term potential both from a philosophical standpoint and efficient technological advance. This is only going to catalyze the development of crypto currencies," he concluded.
Blockchain technology is a system of organization of distributed databases. It allows for various transactions to be registered and labelled with a time stamp, with the relevant information kept in a distributed database available to all network users. One of the most well-known applications of the technology is Bitcoin, a decentralized cryptocurrency and digital payment system.
Cryptocurrencies, or digital currencies, have no material form. An unlimited number of anonymous sources can issue and use such currencies. Central banks worldwide have treated the phenomenon with caution, although some have started exploring the possibilities it offers and even developing their own cryptocurrency.
