The recent $500 billion rout of most cryptos over the past month has since led to a bounce in valuation after what seemed like a perpetual decline. However, the prolonged decrease of crypto prices was a wakeup call for many investors and hodlers who had simply watched as these instruments surged unabated.
While the recent decline has done little to deter optimism in cryptocurrencies, Goldman Sachs Global Head of Investment Research, Steve Strongin, has taken a different stance altogether. Strongin not only sees grounds for a more substantial decline but possibly the total collapse of existing large cap cryptos to zero, per a Bloomberg report.
Strongin is hardly the first individual to bet against crypto’s rise – indeed, many people have made a fortune on the back of these instruments over the past year, creating a new generation of wealth. However, the projection is noteworthy as he sees these instruments going to zero, leading to a total loss of value for coins.
“The high correlation between the different cryptocurrencies worries me. Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero,” warned Mr. Strongin.
Such a finality would be simply catastrophic for investors given – Bitcoin presently has a market cap of $138 billion, while other leaders such as Ethereum ($80 billion) and Ripple ($29 billion) represent the most established cryptos. Rather, the projection instead calls for the displacement of these cryptos by a small set of future competing altcoins or variants.
The doom and gloom projection likens Bitcoin’s rise to that of a bubble, though this is hardly the uniform stance adopted across the industry. Despite the recent rout, cryptocurrencies have seen several notable developments such as their endorsement by the US’ CFTC, which was a huge boost for confidence following several setbacks in China and India.
The prices of Bitcoin, Ethereum, and other coins have also rebounded off of recent lows, which itself is a sign of a healthy market. Hodling and long bias have loomed as problematic trends for brokers and other venues, with a departure from this phenomenon ironically being seen as a good thing.
According to Mr. Strongin: “Are any of today’s cryptocurrencies going to be an Amazon or a Google, or will they end up like many of the now-defunct search engines? Just because we are in a speculative bubble does not mean current prices can’t increase for a handful of survivors. At the same time, it probably does mean that most, if not all, will never see their recent peaks again.”
Source: Finance Magnates
Jr Trader Alexander Kumanov
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.