The cryptocurrency roller coaster continued this week, with some digital currency regaining value after steep January sell-offs. After falling to below $7,000, the value of Bitcoin surged past $12,000 this week before settling at just above $11,000 in early Wednesday trading. The currency logged an all-time high of just under $20,000 in December. The volatile cryptocurrency is more volatile than the stock market as values tend to swing wildly based on perceptions and enthusiasm. All through 2017, the value of Bitcoin went straight up.
Those who got in before the end of last summer have remained in profitable positions despite the recent steep drops. More recent investors have suffered significant losses, at least on paper.
In January, international regulators began expressing concerns about Bitcoin and other cryptocurrencies. South Korea and China, in particular, threatened to regulate trading.
Also last month, most credit card companies issued rules barring customers from using credit cards to buy cryptocurrencies, a practice that had alarmed economists and regulators alike. It was at about that time that Bitcoin’s value began to drop.
Regulatory fears are fading
Wall Street trader Brian Kelly, author of the book “The Bitcoin Big Bang,” says the regulatory fears are fading. In an interview with CNBC, Kelly noted that Wyoming has recently passed a bill relaxing securities laws pertaining to cryptocurrencies.
The South Korean government, in something of an about-face, said it would take a more supportive stance regarding cryptocurrencies as long as they were “normal” transactions.
In an interview with The Wall Street Journal on Monday, John Rainey, chief financial officer at PayPal, said he believes Bitcoin has a future as an option for payments. But Rainey told The Journal that Bitcoin’s current volatility makes it risky for merchants, who could lose their entire profit margin if the currency value did not remain stable.
Not ready for prime time
“The technology, there has real merit to it,” Rainey told the publication. “I do think, though, it will be years down the road before we see the kind of ubiquity and acceptance that makes it a form of currency that is used every day.”
At the same time, U.S. regulators may be hardening their stance. As we reported Monday, key members of Congress on both sides of the aisle have indicated they are willing to consider measures to regulate cryptocurrencies.
According to Coindesk, the principal exchange where Bitcoin trades, the cryptocurrency is up 85 percent from its early February lows. But it also notes some Bitcoin traders aren’t convinced the rally is real and that the currency remains caught up in a “bigger downtrend.”
Via Consumer Affairs.