Has bitcoin finally hit rock bottom?
The price of the digital currency is back above $11,000, just a day after it briefly dipped below $10,000. And millennials could be the reason for the rebound.
It’s been a wild ride for bitcoin over the past year. The price surged more than 1,400% in 2017, topping out at nearly $20,000. But that led to worries that bitcoin may be a bubble and that investors are ignoring many risks.
However, Coindesk reports that prices fell again Wednesday.
“Prices on CoinDesk’s Bitcoin Price Index fell to a low of $10,050.79 yesterday and dipped below $10,000 soon before publishing.,” the news site reported. “At press time, BTC had bounced back to $10,150 levels. The cryptocurrency has depreciated by 11.70 percent in the last 24 hours, according to data source OnChainFX.”
Bitcoin has plunged nearly 20% this year because of concerns about a possible crackdown by South Korea and China and because of a warning from the SEC about its extreme volatility.
The big price fluctuations have also led Stripe, a digital payments company, to announce that it will soon stop processing bitcoin transactions.
A Stripe executive said in a blog post that bitcoin is now “better-suited to being an asset than being a means of exchange” — a concern many analysts share. Currencies like the dollar, euro and yen don’t move as wildly as bitcoin does. They are much more stable.
And UBS chairman Axel Weber told Bloomberg at the World Economic Forum in Davos, Switzerland, that the Swiss investment bank won’t trade bitcoin because he is concerned that more regulations could cause a “massive” drop in the price.
That’s a lot of bitcoin doom and gloom. So why has the price bounced back this quickly? Tim Hockey, the CEO of discount brokerage firm TD Ameritrade, has an interesting theory.
Hockey said during the company’s earnings conference call Tuesday that there has been increased interest in “blockchain related securities, as well as cryptocurrencies in general” from its average investors, many of which are now younger millennials. Blockchain is the digital ledger that keeps records of transactions in bitcoin and other cryptocurrencies.
“Bitcoin and blockchain-related stocks have been more frequently among our clients’ top traded stocks since November,” he said. (Hockey said cannabis stocks were growing increasingly popular with traders as well.)
Others think bitcoin will continue to rebound — and even hit new highs. Dan Ciotoli, a software engineer and blockchain analyst with the research firm Bespoke Investment Group, told CNBC on Wednesday that the price of bitcoin could soar to $30,000 by year’s end.
His rationale? Transactions for purchases involving bitcoin should continue to get faster and cheaper. So bitcoin will become a more viable form of payment, not just a hot momentum trade for what he called “get-rich-quick investors.”
Still, bitcoin could be supplanted by other cryptocurrencies like ethereum and ripple if the processing kinks aren’t worked out soon.
“There are signs that perhaps bitcoin is the victim of its own success,” Daniele Bianchi, an assistant professor of finance with Warwick Business School in Britain, said in an email.
“Rising fees and longer transaction times are the natural consequence of the widespread increasing demand following the public hype and excitement surrounding it,” Bianchi added. “This is bad news for the use of Bitcoin as a pure method of payment.”
But he also said he doesn’t believe there will be “epic crash” in the entire crypto world.
“The truth is that the increasing costs and processing times will spur interest in alternative coins and developments, rather than killing the aggregate demand,” Bianchi said.
And that seems to be the consensus view of most on Wall Street — even bitcoin bears. Few would deny the growth potential for digital payments and blockchain technology broadly. But bitcoin may not necessarily be the crypto that wins out in the end.