Bitcoin stabilises after dramatic price crash
It’s been a turbulent time for Bitcoin after the most famous digital token enjoyed a meteoric price rise at the end of 2017. Since then we’ve seen the volatile cryptocurrency fall below $6k amidst a huge sell-off, but things are looking up as Bitcoin stabilises with a time-of-writing trade price of over $11k.
The sell-off at the start of January followed a string of negative press surrounding Bitcoin and the other major cryptocurrencies. Fears over rumours of price manipulation, an outright ban in South Korea and a huge hack over at Coincheck, which saw over $500k stolen from customers holding NEM coin. Even Facebook weighed in, banning any adverts that promote crypto or initial coin offerings.
But positive news, with Bitcoin stabilising, has seen an upturn in confidence and has attracted more investments, meaning a significant price rise. South Korea has cooled down threats to ban digital currencies and has instead implemented a softer set of regulations.
The upturn in investments is perhaps best highlighted by a huge $400m buy-in by one mystery investor between 9 Feb and 12 Feb. According to Fortune, the investor raised their portfolio to something resembling $1.1 billion, upping their total 55,000 coins to more than 96,000 in the space of four days. This has already seen a return of $86m hit their account.
However, not everyone is so positive about putting large amounts of money into Bitcoin and other digital tokens. Steve Strongin, head of Goldman Sachs, said that many cryptos will fail, with their value falling to a flat $0, causing billions of digital dollars to go missing.
“People seem to be trading cryptocurrencies as though they’re all going to survive, or at least maintain their value. The high correlation between the different cryptocurrencies worries me. Contrary to what one would expect in a rational market, new currencies don’t seem to reduce the value of old currencies; they all seem to move as a single asset class,” Strongin said, according to CNCB.
“But if you believe this is a ‘few-winners take-most’ situation, then the potential for retirement depreciation should be taken into account. And because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.”