Crypto Market Continues Downward
Although Jamie Dimon ‘regretted’ his remarks on Bitcoin, he may be proven to be correct. Last year September the CEO of JPMorgan Chase & Co. referred to Bitcoin as a “fraud” and even warned his employees against trading in the virtual assets. For the better part of 2018 Bitcoin prices were relatively stable, even if trending downwards. Then Bitcoin dropped approximately $1,600 in value in less than a week. The leading crypto shook off nearly $30 billion in market capitalization and investors are quickly forgiving Dimon’s harsh sentiments.
The JP Morgan executive, together with other traditional Wall Street investors, predicted an impending crypto collapse – even comparing them to the infamous 17th century Tulip mania. Legendary Wall Street Investor and Billionaire, Warren Buffet has in the past referred to cryptos as “Rat Poison”. Hedge Fund manager, Kenneth Griffin, shares Mr. Buffet’s sentiments. However, Cryptos enthusiasts like Mike Novogratz believe that the venerable Wall Street investors are old school and fail to see the future of banking and transactions.
One problem with cryptocurrencies is that in the event of high instability, there are no monetary policies to help. Cryptos decentralized nature makes it hard for a single entity to stabilize them such as occurred in 2008’s Wall St rescue package termed “TARP”. The power of stabilizing their value is vested on the people who have invested in the tokens. When the tokens are sold and bought in masses, the prices react. Unless individual investors manage their buying and selling, the coins will continue to exhibit high volatility.
Speculators believe that the recent Bitcoin Cash’s fork could be the reason for the sudden price drop. The leadership of the token is divisive on the future of the coin. Some believe that the token is fine in its current state; others believe that the community should observe Bitcoin’s founder Satoshi Nakamoto’s vision of promoting the coin as a digital currency and not as an investment asset while the other group is open to future modification of the coin.
The disagreement led to forking of the original coin into two other tokens. This, according to experts, led to the coin’s massive price fall. Bitcoin Cash is the leading cryptocurrency and its deteriorating value greatly affected the value of other altcoins.
Bitcoin Crash Causes Ripple Effect
Ripple’s XRP has fallen 6%, while Ethereum on the other hand suffered twice. First, its value dropped by 8% and then the crypto lost its second position in market capitalization to XRP.
Accounting firm KPMG stated that in order for cryptocurrencies to go mainstream, institutional investors have to join the bandwagon. The company, through its Chief Economist, believe that Institutional investors will help legitimize the crypto industry; “More participation from the broader financial services ecosystem will help drive trust and scale for the tokenized economy and help the crypto market grow and mature,“ Constance Hunter, KPMG Economist.