This year has not been good for cryptocurrencies and their investors. The prices of most digital coins have dropped to their lowest levels since late 2017. Even the bitcoin price has dropped from the record high of $19,000 hit last year to about $6,000 now. The outlook also does not look very encouraging, but some are saying the cryptocurrency will rebound.
Worst is yet to come for the Bitcoin price
It is not just the bitcoin price that has been dropping lately. Other cryptocurrencies are also bleeding, and it has intensified in the last two weeks. It seems bears are in total control of the digital coin market currently. They have been able to breach every potential support we’ve seen recently.
This year so far, bitcoin has lost about 60% of its value. Other major cryptocurrencies are doing even worse. For instance, ethereum is down 86% this year, while ripple has lost 92% from its January highs. Overall, the industry capitalization has dropped about 80% from the all-time high set earlier this year. That’s more than the 78% drop in the Nasdaq Composite Index after the dot-com bubble burst in 2000.
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Further, experts believe the drop in the bitcoin price is not over yet. However, different experts have different price targets for the cryptocurrency. For instance, Allianz Chief Economic Adviser Mohamed El-Erian believes the bitcoin price should be around $5,000. According to the expert, the buying frenzy in cryptos was the result of unwanted speculations. He believes cryptocurrencies are not dead, but rather, overvalued. The expert also said cryptocurrency adoption will not be as big as crypto supporters would have thought.
“I think it’s going to be there, it’s going to last for a long time, it’s going to play a role in the ecosystem, but it’s not going to be the currency that a lot of proponents would like it to be,” he told Yahoo Finance.
Another financial expert, Luis Carranza, who founded London Fintech Week, believes the bitcoin price will hit $2,500 this year.
“$4,500 could be the bottom, but nothing is preventing $2,500 from being the bottom,” he told Express in June.
One well-known figure in the financial world even believes the bitcoin price could hit zero eventually. Nouriel Roubini, an economist and cryptocurrency skeptic was among the few who predicted the 2008 stock market crash.
Valid reasons Bitcoin is here to stay
On the other hand, there are many who believe Bitcoin holds potential. Barry Silbert, founder of the Digital Currency Group (DCG), told CNBC in July that he is 100% confident the “decentralized, non-fiat form of money is here to stay.”
Scrutiny and monitoring of companies involved in the cryptocurrency industry have also increased. Such actions from regulators will help rebuild investor confidence in the crypto industry. Earlier this week, the U.S. Securities and Exchange Commission fined a crypto hedge fund for the first time. The Financial Industry Regulatory Authority (FINRA) also charged a broker with securities fraud related to a cryptocurrency deal.
A confidence booster for the crypto industry and the bitcoin price would be the approval of a bitcoin exchange-traded fund (ETF). A bitcoin ETF would allow investors who do not prefer to deal with a specialty bitcoin exchange to also buy digital coins.
The SEC has long been mulling requests to approve a bitcoin ETF. The request was filed by New York-based VanEck and blockchain platform SolidX through the Chicago Board of Exchange (CBOE). The SEC is expected to make a decision sometime this month.
There have also been several positive news articles supporting the long-term potential of the crypto industry. Loyalists expect a boost in the bitcoin price after Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, comes up with a form of bitcoin ETF. A couple of months ago, ICE announced plans to launch a Bitcoin and cryptocurrency platform called Bakkt. To set up the platform, ICE partnered with big names such as Microsoft, Boston Consulting Group and Starbucks.
Citigroup is also the latest big bank to offer Crypto Custody. The bank has bought a tool that can help direct investments from institutional investors into cryptocurrencies. Citi also has plans to launch a Digital Asset Receipt (DAR), which will allow institutional investors to invest in cryptocurrencies in a secure, regulated manner. Nasdaq is also working on tools to assist institutional traders with cryptocurrency investments.
Crypto supporters dismiss comparisons with the dot-com era, arguing that the Nasdaq has hit new highs 15 years later. They also cite the contributions the Internet has made to society. Crypto bulls also note that the bitcoin price has rebounded from similar crashes in the past.