Cryptocurrencies haven’t been feeling too hot the last several months, but the price of Bitcoin (BTC) has managed to consistently hover around $6000 per coin. Given that in 2017, coins were worth nearly $20,000, the value has been less than ideal, but nevertheless, the low volatility has kept crypto investors relatively calm. Unfortunately, this moment of relative stability saw its bitter end on Wednesday when Bitcoin (BTC) dropped 12% to a year-low of $5,390.12 per coin, according to CoinDesk.
In the last 24 hours, Bitcoin (BTC) dropped below its $100 billion market cap for the first time since last October 2017. The cryptocurrency total market capitalization currently sits at $96 billion, but if Bitcoin’s (BTC) value continues to drop off, this number may decrease. As investors in the cryptocurrency space try to calm their nerves after this price action, many are concerned as to the reasoning behind this dip. Analysts in the space are placing the blame on BitCoin Cash, an offshoot of Bitcoin (BTC) itself is set to undergo yet another hard fork on Thursday, resulting in two separate digital currencies; “Bitcoin ABC” and “Bitcoin SV,” short for “Satoshi’s Vision.”
For those unfamiliar with the history of cryptocurrency, Satoshi Nakamoto was the pseudonym used by an individual who released the first white paper describing what would eventually become the framework for cryptocurrency as we know it. Satoshi was furious with the fact that consumers were slowly being falling prey to the inefficacies of banks and other financial institutions. Nakamoto wrote that “commerce on the internet [had] come to rely almost exclusively on financial institutions as trusted third parties to process electronic payments,” and this nurtured dependence would ultimately lead to a fiscal downturn. With a P2P currency network that kept records of every transaction, banks were no longer needed and the era of decentralized currency was on the rise.
Bitcoin’s (BTC) sharp decline caused the altcoin market to lose its collective minds, with valuations of the top valued tokens suffering double-digit percentage losses on Thursday. According to TechCrunch reports, Cardano (ADA) is down 14%, Litecoin (LTC) fell 13%, and Ethereum (ETH) dropped 12%.
Though not directly in support of the altcoin market, International Monetary Fund head Christine Lagarde publicly stated her support of digital currency at a conference in Singapore. However, it is important to distinguish that Lagarde believes digital currency should be regulated and offered from central banking institutions.
“I believe we should consider the possibility to issue digital currency. There may be a role for the state to supply money to the digital economy. The advantage is clear. Your payment would be immediate, safe, cheap and potentially semi-anonymous…And central banks would return a sure footing in payments. ”
–Christine Lagarde, Head of the International Monetary Fund
While Ms. Lagarde’s comments are not directly in support of cryptocurrencies, in fact, her rhetoric almost directly contradicts the intention behind them, her sentiments may give Bitcoin (BTC) and other struggling altcoins the footing it needs in the global market. The underlying technology behind digital currency aligns with what Lagarde believes central banks could strongly benefit from implementing, but the anonymity behind crypto trading presents a safety concern, albeit intended, that regulators will have to find ways to work around.
Interestingly enough, like cryptocurrencies, state-sponsored digital currencies is not a revolutionary concept. Lagarde pointed out in her speech that centralized financial institutions in Canada, China, Sweden, and Uruguay have been toying with the idea for quite some time.
Ms. Lagarde’s comments indicate a significant shift in the global perspective surrounding the potential opportunities that Bitcoin (BTC) and its fellow tokens present. It is for this reason, among others, that despite the recent upset surrounding the dip in the altcoin market, crypto investors are still confident that the future may have significant profit in store.
“For their part, cryptocurrencies seek to anchor trust in technology. So long as they are transparent — and if you are tech savvy — you might trust their services.”
–Christine Lagarde, Head of the International Monetary Fund
