With major banks blocking customers from buying Bitcoin with credit cards and governments cracking down on cryptocurrencies, a Senate hearing on the topic Tuesday was a surprising respite for HODLers (hold on for dear lifers).
The Senate Banking Committee heard testimony from the chairman of the Commodity Futures Trading Commission (CFTC), Christopher Giancarlo, and the chairman of the Securities and Exchange Commission (SEC), Jay Clayton, on the potential dangers of digital currencies as investments. Their testimony, amid a crackdown on Bitcoin exchanges in China and South Korea, wasn’t as negative as many cyrptocurrency investors had feared.
As a result, Bitcoin prices rose to $7,650 on Tuesday, after dipping below $6,000 just a day earlier.
“We owe it to this new generation to respect their enthusiasm for virtual currencies, with a thoughtful and balance response, and not a dismissive one,” Giancarlo said.
With the rise of Bitcoin, banking giants such as J.P. Morgan CEO Jamie Dimon have dismissed digital currencies, but have been careful to differentiate it from Blockchain, the distributed ledger that allows Bitcoin to function. While Dimon has called Bitcoin a “fraud,” he said that Blockchain is something “real.”
But Giancarlo struck a different tone by saying that Bitcoin and Blockchain are not so easily separated—a sign investors took as a positive.
“It’s important to remember that if there were no Bitcoin, there would be no distributed ledger technology,” said Giancarlo when asked about the value of Bitcoin’s underlying technology, Blockchain.
Giancarlo, who was sworn in during the Obama era, went on to point to the many uses of the distributed ledger technology including making it easier to figure out who owned which mortgages during the 2008 financial crisis.
“Sixty-six million tons of American soybeans were just handled through a blockchain transaction by the Dreyfus company to China. So Bitcoin is now being used, it’s being used in our American transportation and logistics system,” Giancarlo said, professing that his niece is a so-called cryptocurrency HODLer. “I think this distributed ledger technology has enormous potential. Now how it will be realized, when it will be realized are challenges, and those we can’t say.”
“I hope people pursue it vigorously,” Clayton, who was nominated by President Donald Trump, added about Blockchain.
On Twitter, Bitcoin’s fans were effusive about the hearing.
Still, that’s not to say the cryptocurrency markets will be smooth sailing for investors. Scammers are already targeting the newly formed industry. Meanwhile, some criminals have sought to kidnap Bitcoin investors for ransom.
“We intend to be very aggressive, if nothing else, so that people like my niece can have some security that there aren’t fraudsters and manipulators out there—and there are a lot, too many, far too many of them,” Giancarlo said.
Still, in light of recent events, it does stand to question whether investors are getting ahead of themselves. Bitcoin prices may fall further because of increased regulatory scrutiny. Part of Bitcoin’s recent slide, for instance, has come as a result of an subpoena of Bitcoin exchange Bitfinex by the CFTC for information about its relationship with its dollar-pegged cryptocurrency Tether. That comes amid speculation about whether Tether is artificially propping up Bitcoin prices.
Bitcoin Prices Again Below $8K, But Traders Forecast Fresh Upside
Bitcoin has fallen 11.23 percent in the 24 hours to press time Monday, Feb. 5, dropping below support at $8000 as its price continues to dictate altcoin performance.
Data from Coin360 Monday shows a continuation of lacklustre price action for the largest cryptocurrency, which saw its slight rebound Saturday, Feb. 4 all but erased over the weekend.
Image source: coin360.io
On Coinbase, Bitstamp and some other exchanges, Bitcoin failed to maintain $8000 into Monday, hovering at around $7900 at press time, about $275 off Friday’s multi-month lows of $7625.
Friday’s dip triggered a short-term uptick that saw prices gain over $1200 in a single hour, enthusiasm appearing to dampen once again after passing $9000.
On social media, cryptocurrency traders remained more steadfast than ever in their faith about both Bitcoin and altcoin perspectives.
John McAfee, who has championed Bitcoin and recently begun focussing on specific altcoins, told Twitter followers to “get a perspective” in the face of falling value.
“In a long term view, (Bitcoin) is still climbing. Forget about these short term ups and downs,” he continued.
Adding some perspective on the overall red-washed market, CNBC’s Ran Neuner tweeted yesterday that the combined market cap of all cryptocurrencies today is the same as it was in December, 2017:
At press time, the total market cap according to CoinMarketCap was around $369 million, about the same level as it was Dec. 6, 2017:
Altcoin-focused accounts also cautioned traders against paying attention to coins’ value in USD or other fiat currency terms. Others were more bullish, using various methods as proof a more serious upturn was the most likely short-term future for Bitcoin.
Cryptocurrency market could hit $1 trillion this year with bitcoin surging to $50,000, experts say
Many commentators have noted that bitcoin and other cryptocurrencies have no fundamental value. But others have suggested that digital tokens like ethereum, which can be used to build new blockchain applications, could have value in the future as the industry moves forward and develops.
Some companies like IOTA and NEO are trying to create blockchain platforms that developers can build on. Those applications can be powered by IOTA or NEO tokens. The same is true of ethereum. Mick Sherman, co-founder and CEO of Hercules Tech, a data science company focusing on blockchain and big data, said these are the digital coins that could see their prices appreciate the most this year.
“Utility tokens and assets with a working platform and a clear-cut reason for requiring both a blockchain and their own token, are more likely to appreciate in value this year. Some of these cryptoassets will not be used for years, meaning they have no utility value,” Sherman told CNBC in an email on Tuesday.
The CEO warned that many of the blockchain projects could be years away and more bubbles could arise.
“The revolutionary nature of blockchain technology is what’s driving the hype and even though we may be years away from viable blockchain-based assets, we may very well see several more bubbles,” Sherman said.