The New Criterion
December 10, 2018
Q&A 10 December 2018
December 10, 2018

Digital currencies finish the year on a low

After trending sideways for most the year in a range between $8000 and $10,000, the price of Bitcoin dropped sharply in November and looks like ending the year around the $5,000 mark.

Most of the other major cryptocurrencies have followed a similar pattern. Some analysts have put the latest falls down to a general move away from risk assets.

ProChain Capital president David Tawil told Bloomberg: “We’re seeing new lows in everything for the year. It’s a risk-off environment all round. No risk assets are safe. Cash and treasuries are the only things that will be up, with this pervasive sentiment.”

Conditions in the market have not been helped by a recent statement from the US Securities and Exchange Commission that there is a lack of consumer protection in the cryptocurrency market. The SEC has been reluctant to register crypto ETFs, which would broaden the market to a much bigger investor base, and its latest comments suggest it is not likely to do so in the near future.

On the positive side, Nasdaq confirmed last week that it would list Bitcoin futures next year.

Market participants are hoping that the steady development of market infrastructure, such as Nasdaq’s move, will encourage institutional investors to take an interest in cryptocurrency.

Institutions might also be encouraged by the Leaders’ Declaration at the end of the G20 meeting in Buenos Aires, which mentioned cryptocurrency and the need for international regulatory co-ordination.

Kee Jeffreys, the co-founder of blockchain network provider Loki, says: “The biggest takeaway for 2018 is that development and research continued, despite a sustained bear market. The actual use of cryptocurrencies, measured by global transaction volumes, is on an upward trend.

“There were significant technological advances throughout 2018, particularly in the privacy space.”

Roger Lim, founding partner at NEO Global Capital, says: “The future of cryptocurrency is a dynamic one. Despite current conditions, 2018 saw endorsements from traditional financial powerhouses, such as Fidelity and Nasdaq, which will provide a push for cryptocurrency in the New Year.

“As institutional investors, high net worth individuals and family offices continue to monitor and take cryptocurrency seriously, and with regulators working to improve standards and guidelines, I expect that the market will mature in parallel. If the industry can continue to shift gears and direct its attention towards this narrative of growth, I think it’s very likely that we will see a comeback in 2019.”