Is Cryptocurrency Dead? Debunking Crypto Myths
Although cryptocurrency prices still remain mired in the thrall of an ongoing bear market, crypto is far from dead. Before Bitcoin prices skyrocketed to nearly $20,000 in December 2017, cryptocurrency markets experienced plenty of volatility, including a dramatic downturn between 2013 and 2015, during which the price of Bitcoin receded 86%.
The difference this time around, however, is publicity. Investment risk numbers are roughly the same as they were during the 2013 - 2015 decline, but a surge of mainstream media coverage following the 2017 bull run has thrown crypto’s current slump into the spotlight like never before.
As a result, this bear run is shouldering the added burden of higher risk perception. This means that it may take longer for the market to recover. But Bitcoin has made several big corrections in the past, bouncing back from the 2013 - 2015 bear run to reach an all-time high.
Markets, by design, are cyclical. The history of cryptocurrency has been littered with booms and busts. To understand where it’s going, we need to examine its past.
It Started With Bitcoin
Practically speaking, cryptocurrency is still in its infancy. Bitcoin emerged in the direct wake of the 2008 financial crash, and did not reach parity with the dollar until 2011. Only four months after hitting this 1:1 value ratio, its price shot up to $31.91 but then dropped by nearly two-thirds several days later.
In 2014, Microsoft began accepting Bitcoin payments. This was a huge step forward in institutional adoption. By August 2015, 160,000 merchants accepted Bitcoin. In 2016, the crypto market entered into a bull run, and became the world’s top-performing currency for the second year straight. March 2017 saw Bitcoin reach unit-for-unity parity with gold at a price slightly over $1000. The market cap of gold still exceeds that of Bitcoin, but because Bitcoin’s supply is limited, it has no where to go but up.
Although Bitcoin is experiencing a slump, but after its bull run faded, the cryptocurrency’s volatility exhibited its longest sustained drop so far. Even if the market has yet to be rejuvenated, the protracted stability of the price of Bitcoin indicates that crypto isn’t going away any time soon.
The Rise of Blockchain Technology
As Ripple CEO Brad Garlinghouse explained, banks and financial institutions worldwide are leaning into blockchain solutions “because it enables a more transparent, quicker, and lower cost payments experience.” Ripple leads the pack in blockchain-based, near-instant international payment rails, with an added bonus of no transaction fees.
In September 2018, the National Commercial Bank of the Kingdom of Saudi Arabia became a Ripple customer. As a part of RippleNet, the NCB now functions within a rapidly expanding network of banks, payment providers, digital asset exchanges, and more.
The NCB serves 3.3 million customers, and stands as the biggest financial asset manager in the Middle East. Saudi Arabia also has one of the largest labor markets worldwide, and its industries employ over 11 million workers from foreign nations. As a result, immediate cross-border money transfers are in high demand.
The demand for instantaneous international value transfers also drove the development of JPM Coin, JP Morgan’s digital token. The token runs on a permissioned network, and users must be approved by JP Morgan. Although JPM Coin is technically not a cryptocurrency, it does run on blockchain technology, which is a huge step forward in the institutionalization of crypto infrastructure.
JP Morgan introduced this digital token to keep pace with the increasing popularity of smart contracts, which generates demand for value transfers that can occur as soon as contracts close. As smart contracts and other applications of blockchain technology become increasingly widespread, institutions are forced to adapt their infrastructure to become more crypto-friendly.
Blockchain solutions can be successfully applied to problems of supply chain management, identity authentication, peer-to-peer healthcare, and more. Corporate giants are taking note. Walmart is using blockchain to manage its supply chain, and Amazon is rolling out blockchain templates that users can use to develop secure blockchain based networks.
As more and more industries begin to adopt blockchain infrastructure, the volume of on-chain transactions grows. And that’s good for cryptocurrency.
Financial Industry Inroads
The U.S. Securities and Exchange Commission is currently reviewing two bitcoin ETF proposals. Federal approval would prove a major boone to mass adoption of cryptocurrencies, and would legitimize crypto as an investment asset class in the eyes of investors. This, in turn, would pump massive volumes of Wall Street capital into crypto markets, making prices skyrocket as a result.
Additionally, the Intercontinental Exchange Inc. (ICE), the parent company of the New York Stock Exchange (NYSE), is set to launch a global cryptocurrency platform called Bakkt. This platform, explained Bakkt CEO Kelly Loeffler, is designed to be an efficient, regulated, cost-effective space for investment in digital assets. In short, Bakkt exists to allow merchants, investors, and consumers to use, trade, access, and transfer these digital assets.
Bakkt aims to simplify crypto payments and to provide protection for Bitcoin similar to that which backs traditional stocks and bonds, thereby building trust in cryptocurrency assets. Its goal is also to incentivize mass adoption of digital assets.
This type of infrastructure will facilitate the flow of institutional money into the market, and the process already seems to be underway. Fidelity Investments, a Wall Street investment firm that serves over 27 million customers and administers $7.2 trillion in client assets, has launched a crypto trading desk. As a result, hedge funds and other pros can now easily invest in cryptocurrencies.
Traditional financial firms are beginning to enter the crypto space, setting the stage for a future bull run that could hoist crypto to never-before-seen heights.
A Good Time To Buy Cryptocurrency
Among institutions and consumers alike, the popularity of cryptocurrency has continued to grow in spite of market downturns. Prices may still be looking for a bottom, which means that now might be a good time to buy. Investments are risks, but if you’re willing to take that chance, this is an opportunity to make a grab while prices are relatively low.
If you are seeking to purchase Bitcoin, Ether, or Litecoin without the headache, visit a Pelicoin ATM today. Each of our locations across the Gulf South offers secure 24-hour service and are designed to make your cryptocurrency transaction as quick and easy as possible.