Home Options Morning Commentary – Bitcoin and Other Cryptocurrencies Continue to Slide

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The cryptocurrency markets continue to slide as regulatory pressures and losses of banking relationships mount. As of the early morning on Monday, Bitcoin is trading neither -12% as investors have significantly curbed their appetite to buy the world’s most popular cryptocurrency brand. This of course is a sharp contrast to the record-setting pace of new investors entering into the space during the strongest part of last year’s rally which ended with Bitcoin reaching nearly $20,000 in December. Many exchanges at the time decided to halt new registrations, stating that they were overwhelmed by the demand. At the same time, as noted in previous articles here, regulators continued to seek to rein in speculation by the average investor.

Nevertheless, during this very period of dramatically increased regulatory intervention and exchanges curbing new registrations for their trading platforms, we nevertheless saw a massive increase in issuance of the cryptocurrency call Tether. Tether is described by its creator, Tether Limited, as a being a cryptocurrency that is “100% backed” by USD cash reserves. But as was mentioned in a previous article, there remains substantial doubt that such reserves equal the sheer amount of Tethers issued, especially given the great increase of regulatory and banking barriers that came to be since April of 2017. It should also be noted that at this stage all major US banks have blocked the use of their credit card products for the purchase of cryptocurrencies, including JP Morgan, Bank of America, Citigroup, Discover and Capital One.

Ultimately, this casts a huge shadow over the future viability of the vast majority of cryptocurrencies, including Bitcoin itself. While is seems likely that some of the current batch of over one thousand cryptocurrencies and utility tokens will survive to be utilized on a wide scale, many seem painfully out of step with the arguments forwarded by early speculators as to the value of these products. Ultimately, they will now have to prove their value outside of a speculative bubble. We’ll watch how they perform going forward.



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