Crypto traders cling to hope the momentum will return soon
SINGAPORE: Cryptocurrencies slipped on Thursday, though without falling through recent lows, as traders clung to hopes that a nascent recovery from last week’s plunge can regain its momentum. Bitcoin has failed to hold above its 200-day moving average and it fell about 4% in the Asia session to $37,619. Ether , the coin linked to the ethereum blockchain network and the second-biggest cryptocurrency by market value, fell more than 7% to $2,675.10.Both have marked sizeable year-to-date gains, with bitcoin up about 30% and ether more than tripling. But a month-long selloff culminating in a sharp collapse last week has each of them well below record peaks made in April.
Meme coins or digital gold? Blockchain analyst weighs in on where crypto markets are headed
The cryptocurrency space could branch out into three different markets — and people may even stop talking about crypto as a single entity one year on, predicted Paul Brody, global blockchain leader at EY. Bitcoin and ether have had a wild ride in recent weeks, with billions of dollars wiped off their market value, according to Coinmarketcap.com. Bitcoin, the largest digital currency by market cap, at one point plunged by 30% to hover near the $30,000 level. It has since bounced back partially to current levels of about $38,090, according to Coin Metrics. There are currently three “very different” stories going on in the cryptocurrency space, Brody told CNBC’s “Street Signs Asia” on Tuesday.
The first category is what Brody termed “meme coins” such as dogecoin, a digital token that originally started as a joke. Its meteoric rise in price, however, has been no laughing matter. Since the start of the year, dogecoin has risen more than 7,000%, according to data from Coinbase.
This segment of cryptocurrencies “could be categorized as investing as entertainment,” Brody said. “It’s hard for me to predict where they’re going to go, but I don’t see them as having a very big future in the ecosystem,” he added.
- Bitcoin as ‘digital gold’
The next part of the ecosystem revolves around bitcoin, Brody said. The digital token has often been cited as a potential competitor to gold as a hedge against inflation and safe-haven asset. Still, bitcoin’s price volatility tends to be much higher as compared with gold. According to Brody, however, bitcoin is “better than gold” in some ways. “When the price of gold goes up people mine more, but you can’t really do that with bitcoin,” he said.
The cryptocurrency is limited and a maximum of 21 million bitcoins can be “mined” — there are currently more than 18 million already in circulation. New bitcoin is created by computer users who solve complicated mathematical puzzles, and they take up a lot of energy. “Bitcoin is gonna go up if everybody buys into this idea that you should have some percentage of your … portfolio in bitcoin — that will drive a lot of participation,” Brody said. Questions remain around bitcoin’s exact place in an investment portfolio, with analysts from Societe Generale saying that it’s still “highly contested.”
- The Ethereum ecosystem
Bitcoin Outflow From Exchanges Suggests Confidence Crypto Rout Is Over
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