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Bitcoin Losses Spotlight Bear Case for Cryptos

In investing, the selection names – those that show off major market capitalizations, grab most of the stocks and are usually among the most widespread among individuals and speculators – can be abbreviated for entire industries.

So it is with bitcoin, the leader of the cryptocurrency by market capitalization. Bitcoin is the name fallen to parties (the apple, perhaps, of the digital currency to draw a parallel), and where prices have slipped by more than 30% last week from $ 5,553 to $ 3,824, headed for Monday (November 19). The midweek swing was even lower and represented a decline of over 44%.

Several news sources have pointed out that the bitcoin suffered the worst weekly loss in five years, arriving at a distance from the 44% loss that marked the second week of April 2013, slipping to $ 91 from $ 165, as noted by CoinDesk. Some analyzes indicate moving averages or the fact that at least some holders, as reported by CNBC, may have stop-loss orders in place, which partly seek to limit trading losses.

However, passing from the technical discussions, the foundations are worthy of examination. In this case, the name of the selection seems to offer little comfort to those looking for a global currency.

Some bulls said the fundamentals are still there, although expectations on price gains from recent levels have become a little muted, perhaps. Thomas Lee, managing director and head of Fundstrat's research, brought his year-end price target to $ 15,000 from $ 25,000, which still accounts for hundreds of percentage points of earnings compared to recent levels.

Just this month, Ron Paul, a former member of the US Congress and current cryptographic defender, released a survey of 58,000 respondents, with as many as 49% who said they chose bitcoins on gold (39%) and on US Treasuries (10%) as investments to be held for 10 years. US dollars (the type of money) got only 2% of the votes.

Beyond the price targets and the ten-year projections, one might ask, then, how will the world be encrypted in 10 years – OK, take those six months, for that matter. There are scattered titles that show an incremental absorption of criptos, at least in Europe, or that some things, at least, are encoded.

In Poland, President Andrzej Duda has signed and introduced legislation that will impose a 19% cryptocurrency tax on related income from trade in goods and services. Could we assume that a heavy tax on this trade could limit this activity?

Here are some other proofs of the fact that cold water is thrown on the idea that Bitcoin has an easy way to become a widely held settlement of payments and values. In Paris, the Financial Action Task Force, the regulatory agency that oversees the anti-money laundering (AML), has stated that international standards for cryptos are coming, courtesy of the rules that will be debited in June 2019. This means that crypto exchanges will be more heavily regulated, as will companies that provide encrypted portfolios and financial services for initial coin offerings (ICOs).

The drumbeat is both accelerating and becoming noisier for the adoption of the larger bitcoin case, and others are a little weaker.

Securities – as the recent announcement that Switzerland has launched an offer based on a basket of cryptocurrencies do not support any price stability in the encrypted realm. Taxes and regulatory scrutiny do not help prices, at least, in the short term.

The lower the prices (as in the case of any investment, speculative or otherwise), the less excited people will probably keep it. The less inclined people are to keep what is volatile, the less likely there will be a transformation in the way we interact and operate, at least as far as cryptocurrencies are concerned. Stability is crucial and nobody wants to go to sleep on Monday to find out Tuesday that the power to buy their (digital) portfolio is 10 percent lower.

Price fluctuations and illiquidity are the enemies of trust.

There is evidence that people are powerless of bitcoin's initial hope of being a mainstay of commerce. Last week reports came that the use of bitcoins in commercial payments was actually down, as estimated by Chainalysis, down to $ 97 million last September from $ 427 million in December last year.

Beyond the decline of the bitcoin-as-currency scenario, there are also implications for encryption in ICOs. Data released mid-month from ICORating, which analyzes ICOs, found that about 597 Ico raised $ 1.8 billion in the third quarter of this year a little less than $ 8.3 billion collected in the second quarter. ICORating also stated that 57% of ICOs were unable to raise more than $ 100,000.

Capital, the oxygen of innovation, is proving to be poor. Speculation is clouding price stability. The lack of price stability obscures the use of bitcoins, or criptos in general, on the market. It looks like the idea of ​​bitcoin and its siblings, as the currency is losing currency.



Our data and analysis team has developed a number of creative methodologies and structures that measure and evaluate innovation that is reshaping the payment and trade ecosystem. Check out the latest PYMNTS: The IA Gap: Perception versus reality in payment and banking services

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