A swirling maelstrom of cryptocurrency-related news has been taking global markets by storm, and many investors are having trouble deciphering the signal from the noise when it comes to information surrounding Bitcoin, everyone’s favorite cryptocurrency. Chiefly, investors are wondering whether Bitcoin may finally be bouncing back after its recent loss of valuation, and market analysts who are looking into it are quickly discovering that Bitcoin still has a myriad of obstacles in its path.
A temporary surge sparks hope
The latest slew of rumors surrounding Bitcoin is centered on the recent rise in valuation the digital tokens enjoyed, with prices surging by as much as 8.7 percent. Drawing favorable headlines from around the globe, Bitcoin’s recent spike in valuation, the biggest in weeks that saw the currency adding some $7.7 billion in market capitalization, has many of the currency’s proponents assured that Bitcoin is back, and that this time it’s here to stay.
Unfortunately for Bitcoin’s long-term proponents, however, recent gains in valuation are unlikely to convince the broader market that the aspiring cryptocurrency has much of a future. Recent news out of Asia, for instance, has put a serious damper on the future prospects of cryptocurrencies, and many investors are beginning to wonder whether Bitcoin and other leading digital tokens can endure the harsher regulatory policies that appear to be becoming the norm around the world.
China’s recent total ban on cryptocurrency trading, for instance, has many justifiably concerned that the future of these digital currencies will be mired by a lack of access to rapidly growing Asian markets. Few are asserting that Bitcoin and other cryptocurrencies will face imminent doom because of the ban, of course, but rather the conventional wisdom forming appears to be that intense regulatory pressure on Bitcoin and other currencies by central state authorities will constrain their future growth in valuation.
With Asian economies continuing to be the pioneers of recent global economic growth, it stands to reason that if Bitcoin and other cryptocurrencies can’t regain access to lucrative markets like that which was, until recently, growing in China, they won’t endure for more than a few years as serious contenders in international markets. It’s not just a recent ban in China that’s taken the wind out of Bitcoin’s sales, however; regardless of a recent jump in valuation, the market is quickly coming to distrust many cryptocurrencies due to the stigma of fraud that continues to surround them in many households and offices.
Grappling with the specter of fraud
For Bitcoin’s financial proponents, the greatest challenge in the years to come may be evading a harsh regulatory crackdown caused by widespread assumptions that it and other cryptocurrencies are rife with fraud. The massive surge in popularity Bitcoin enjoyed as it soared to new valuation heights was quickly mitigated by widespread assumptions that newcomers to the currency were being swindled out of their money, and that other digital tokens were riding Bitcoin’s coattails in order to scam unsuspecting investors.
Whether or not Bitcoin or other cryptocurrencies are truly plagued by extensive fraud isn’t so much the problem as is the perception of said fraud. The market isn’t always known for being rational and we still don’t know how Bitcoin affects the world economy. Investors, once spooked, could reasonably be expected to abandon any given cryptocurrency should it come under the close scrutiny of a governmental body due to concerns of fraud. This will continue to be a major hurdle to Bitcoin’s long-term success, particularly if other cryptocurrencies continue to leverage its popularity into interest for their own fraudulent or lackluster ICOs.
The growing assumption that Bitcoin is a speculative asset, rather than an actual currency regularly used in transactions, too, will be a major factor in stymying Bitcoin’s future growth. Concerns that Bitcoin is some massive energy-drain on the planet that will quickly consume all of our power may be rampant in the media, but are largely meritless; concerns that Bitcoin isn’t a “stable store of value,” as former Federal Reserve Chairwoman Janet Yellen once labeled it, however, will remain widespread and legitimate, curbing Bitcoin’s potential.
Like virtually every other cryptocurrency currently drawing hectic headlines, Bitcoin will inevitably enjoy surges in valuation like that which has recently put it back in the news. The crypto-market appears to be firmly in love with the idea of volatile valuations, and anyone expecting Bitcoin to remain either incredibly low or high for too long clearly hasn’t been paying too much attention to the digital tokens. Nonetheless, it’s that precise volatility which will continue to act as a major hurdle to Bitcoin’s future, continued success – rises in valuation won’t mean much to investors if they’re immediately followed by sudden plunges. The fate of cryptocurrencies like Bitcoin is likely in the hands of regulatory bodies who are eying it with greater scrutiny than ever – something that should be at the forefront of investor’s minds. As Bitcoin’s valuation continues to rapidly split between new highs and lows, keep the rampant volatility of the currency in consideration as you decide whether or not it’s truly “back.”