Since the beginning of the year, bitcoin has risen by more than 50%, reports Les Echos. The ascent could well continue for this cryptocurrency, which has been known more for its low’s than high’s lately.
In fact, the value of a bitcoin could easily be used to illustrate the term “volatility” in a dictionary. On May 10, mid-day, its value stood at $8376.55 but it was only $4733.61 dollars exactly four months ago. However, a year earlier, it was valued at $12046.77 dollars and made investors salivate.
Analysts argue that there is a one in ten chance that the value of Bitcoin exceeds US$10,000 by September, and one in five chance it goes back to that level before the end of the year, according to Skew.
There is a 1 in 10 chance that the value of Bitcoin exceeds US$10,000 by September, and 1 in 5 chance it reaches that level before the end of the year.
The upswing of bitcoin illustrates a global growth in cryptocurrencies, to which Ripple appears to be the rare exception. Ethereum has made gains of 23% since the beginning of the year, while the Litecoin jumped by 146% and Bloomberg’s crypto index shows a 26% gain. As for Ripple, it’s down by 13%.
Enjoying the fruits of patience
It might not be long before investors in cryptocurrencies regain their smiles. Arthur Hayes, co-founder, and leader of the Bitmex platform is one of those who see the bitcoin bounce back to the north of the $10,000 benchmark later this year. While market capitalization of crypto currently stands at 187 billion, Chris Burniske of Placeholder predicts it could exceed the US $1000 billion in the not too distant future.
While market capitalization of crypto currently stands at 187 billion, it could exceed the US $1000 billion in the not too distant future.
Tuur Demeester, of Adamant Capital, paints a more conservative picture. He believes that the market is in the last phase of the current downward trend and is expected to hover between $3000 and $6500 dollars for some time.
New kids on the block
A hundred American institutional investors have already invested in either the cryptocurrencies or the cryptocurrency companies, according to a Greenwich Associates poll. In this survey, nearly half of the 441 investors surveyed say they are willing to make such investments over the next five years. The sector could, therefore, benefit from new buyers.
Not surprisingly, younger individual investors are more enthusiastic about cryptos. According to a Harris poll conducted for Blockchain Capital last April, 42% of young American men (generation Y) wish to invest in bitcoin. At 24%, young women of the same generation show less enthusiasm.
While 42% of young American men (generation Y) wish to invest in bitcoin. At 24%, young women of the same generation show less enthusiasm.
Even the endowment funds of American universities are tempted. One in two intends to increase its investment in cryptocurrencies over the next 12 months, compared with only 7% who are thinking about reducing them, and 38% who are not contemplating any changes, according to a poll by Global Custodian and the Trade Crypto. Those who hesitate are concerned about the lack of reliability of the trading platforms, the high volatility, the lack of liquidity, but also the regulation.
Cryptocurrencies are allergic to regulation
A study by Jeroen Koenraadt and Edith Leung of the Erasmus School of Economics indicates that increase in regulation would decrease the price of virtual currency by 2.9% on average, between the day of the announcement and the next day. The announcement of the Securities and Exchange Commission that the tokens are legally considered as full assets have lowered the prices by 4.2%.
Other elements are also likely to have implications. The announcement of taxation on these assets could decrease their value by 3.4%. Further, the reinforcement of control and regulation of the platforms will almost certainly lead to panic resulting in a drop in prices of 8.5%.
The study also states that, the more transparent the crypto, the more focused the project and the more experienced the management team, the less likely the decisions of the regulators will affect it.
So are you likely let yourself be tempted by this asset that might sooner than later bounce back to its highest peaks (or not)?
