8 Feb, 2018 Update – Bitcoin price prediction is proving to be extremely tricky, after a dismal few weeks for those who have invested in the cryptocurrency. The entire niche has experienced a major sell-off recently, with considerable scepticism that Bitcoin, Ethereum and Ripple can maintain their value. But many still believe that Bitcoin has a significant upside.
More positive news is provided by the fact that the last few days have seen a stronger performance for Bitcoin and the cryptocurrency sphere. After plummeting in the early weeks of trading in 2018, the price of Bitcoin increased by around 6 percent over the last few days. Meanwhile, other could take currency is increased by as much as 25 percent, as the market showed signs of a resurgence.
Nonetheless, there is no doubt that Bitcoin price prediction remains extremely hazardous. Many experts are sceptical on the long-term potential of the digital payment system, and the regulatory authorities have certainly ganged up against cryptocurrencies in the last few weeks. The fact remains that Bitcoin has lost over half of its value from its peak of just a couple of months ago, and the current trading conditions for the digital currency are far from ideal.
It hardly helps the future of Bitcoin price prediction when major bureaucrats are calling for legislation to be passed against cryptocurrencies in general. And the call of a top European Central Bank policymaker to clamp down on virtual currencies due to their threat to financial stability can only be viewed as a negative for the niche.
Yves Mersch, a member of the ECB’s executive board, said the central bank shared the views voiced by Agustín Carstens, the head of the Bank for International Settlements. Carstens had described Bitcoin as “a combination of a bubble, a Ponzi scheme and an environmental disaster”. Outlining ECB policy, Mersch added that “we at the ECB are fully in line with his views and we have similar worries”.
When later speaking at the Official Monetary and Financial Institutions Forum in London, Mersch suggested that global answers need to be found to the Bitcoin phenomenon and, in order to “safeguard the integrity of financial sector services”. While nothing is currently on the table in the Eurozone, Mersch did suggest that “resolute ring-fencing measures might be needed.”
Obviously such talk is extremely bad news for those who are bullish on Bitcoin price prediction. This is by far the first example of major legislators speaking out against the cryptocurrency revolution. Bitcoin has met with particular opposition in East Asia, with both the South Korean and Chinese authorities regulating against the digital currency solution.
Mersch further spoke out on what he perceived to be the negatives of Bitcoin, stating that the cryptocurrency is significantly inferior to existing payment options, owing to the fact that it is slow and expensive. As the Bitcoin blockchain becomes more complex, it has been noted that transactions in the cryptocurrency can take quite some time to process, and Mersch asserted that “at these speeds, if you bought a bunch of tulips with bitcoin they may well have wilted by the time the transaction was confirmed.”
But despite the apparent negativity at the ECB regarding Bitcoin, Mersch still had a few positive comments to make towards the end of his speech. “Virtual currencies are not money, nor will they be for the foreseeable future. But just because the initial euphoria and hype subsequently fade, it does not mean that the innovation is without virtue, even if early market leaders may not last the distance,” the executive commented.
Goldman Sachs sceptical
But the existing financial aristocracy continues to be sceptical about the potential of becoming price prediction. Goldman Sachs’ global head of investment research, Steve Strongin, repeated warnings which suggest that Bitcoin could struggle in the longer term. “The high correlation between the different cryptocurrencies worries me. Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.”
Of course, many who are supportive of Bitcoin point out that existing currency doesn’t have intrinsic value either, and that Bitcoin can retain its market position owing to the finite quantity of coins to be issued, which differs from the existing monetary supply.
However, some investors have been positive on Bitcoin price prediction. Tyler Winklevoss, co-founder of Winklevoss Capital, suggested that the currency is already having a massive impact on the price and market position of gold. Winklevoss suggested that the digital payment method will eventually reach a capital appreciation of $7 trillion, and that it will significantly disrupt the gold market; traditionally seen as a major store of value.
“The market capital of gold is 7 trillion. In the market capital of bitcoin, let’s say it’s around 100 to 200 billion. We think that bitcoin disrupts gold,” Vinklevoss commented on Bloomberg. Certainly, there is no doubt that Bitcoin has outperformed gold over the last couple of years, even after the dramatic drawback in his valuation over the last few weeks.
And Vinklevoss suggested that Bitcoin could essentially supersede gold in the coming years. “It is gold 2.0. So it has an appreciation from anywhere from 100 billion to 7 trillion. So that could be anywhere from like 30 to 40 times from here.”
Benjamin Dives, chief executive of the London Block Exchange, also suggest that Bitcoin has transformative power owing to its attractiveness to the younger generation. Dives asserts that one in three British millennials will have invested in a cryptocurrency by the end of the calendar year, and expects digital currency investment to overtake bonds and shares as popularity rises in those aged between 18 and 35.
World Economic Forum
As Bitcoin continues to recede in price, there is no doubt that the cryptocurrency faces a challenging climate. International regulators are circling in Davos, at the World Economic Forum, and the cryptocurrency sphere is firmly in their collective sites.
Luminaries of the financial world have already spoken out against Bitcoin at Davos, although there has been considerably less hostility towards the blockchain. Nonetheless, after legislation was passed in South Korea which has impacted on the price of Bitcoin, many European politicians are also assessing the possibility of such moves.
Naturally, this is hardly good news for Bitcoin, and is contributing to an atmosphere in which the general sentiment is bearish. This has seen the price of Bitcoin plummet to just under $11,000 in trading today; around 40% under its peak value of just weeks ago.
Those who are bullish on the cryptocurrency still point to its finite nature. But the vultures are certainly circling the crypto niche at the moment, with Ethereum and Ripple also taking something of a kicking.
News from Japan has also contributed to the fall in price, with a major exchange, Coincheck, having suddenly ceased trading. While there is no news yet on why this occurred, the Internet is already awash with some unproven, but admittedly plausible, theories.
Morgan Stanley futures
Morgan Stanley has announced its decision to clear Bitcoin futures for its clients, in what will be seen as positive news for the cryptocurrency.
Goldman Sachs had previously been the only major investment bank on Wall Street providing this service.
However, it is expected that many other banks will follow suit as Bitcoin futures become more established.
This can be considered a rare ray of light for Bitcoin in recent weeks, as the digital payment system struggles to maintain its elevated value.
Bitcoin is currently priced at around $11,300 per unit, meaning that it has nearly halved in value since the turn of the year.
But in a climate that is rapidly turning bearish for Bitcoin, one prognosticator remains positive on the future direction of the cryptocurrency. The Bitcoin price prediction of Fundstrat’s Tom Lee remains adamant is that the digital currency will recover its losses, and more besides, in the coming years. Lee has set a $25,000 price target for Bitcoin by the end of the year, with his model for valuing the cryptocurrency predicting that it will each an exalted price of $125,000 by 2022.
“We expect bitcoin’s major low to be $9,000, and we would be aggressive buyers around that level. We view this $9,000 as the biggest buying opportunity in 2018,” Lee commented.
So not all pundits are bearish on Bitcoin.
While the debate over Bitcoin price prediction continues, many in the investment community believe that the deals that Ripple has done with the mainstream financial architecture will lead to its value increasing exponentially in the coming years. If that seems unlikely, one only needs to look at the incredible escalation in the Bitcoin price over the last 12 months in particular, even though the cryptocurrency has slumped somewhat over the last few weeks.
Certainly the cryptocurrency niche will remain a headline-making proposition in 2018. Bitcoin price prediction is proving very difficult in a climate in which the South Korean authorities are taking firm measures against altcoins. Breaking news indicates that police and tax authorities have raided cryptocurrency exchanges in Korea, as the nation continues its official opposition to Bitcoin and other digital solutions.
“There are great concerns regarding virtual currencies and the justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” justice minister Park Sang-ki commented.
This sentiment had seen Bitcoin lost $2,000 in value in a matter of hours, with the value of the alternative currency plummeting 21 percent in Korean exchanges.
South Korea’s ban “will make trading difficult here, but not impossible,” according to Mun Chong-hyun, chief analyst at EST Security. What can be said for certain is that Bitcoin will continue to make headlines, regardless of whether the bulls or bears are correct..