Is the bitcoin bubble set to burst
10.45am – UPDATE – What if Satoshi sold his pot of bitcoin gold?
Ethereum has got a scaling problem and the bugs resurfaced yesterday just as the prices started to plunge.
Ethereum blockchain was fighting to restore normal service yesterday as the amount of people looking to withdraw their money caused congestion that forced a number of exchanges to halt transactions.
Although scaling issues are a real threat for cryptocurrencies, Ava Lawrence from Token Agency told Express.co.uk: “The biggest risk to bitcoin and the knock on effect to all cryptocurrencies is if Satoshi Nakamoto, whoever he or she (they?) is, sells their 1 million bitcoins. People have been howling at the moon over Charlie Lee selling his Litecoin holdings, can you imagine the effect if Satoshi did the same.
“Millennials are the largest generation and are coming to the age of holding stocks and shares. They are attracted to cryptocurrencies in that they offer freedom from broken financial systems, the pain of which they have personally experienced with the 2008 crash.
“This revolution is only just beginning. So no, no chance cryptos are ever going to be out of the media, they are here to stay. This is the new normal.”
10.22am – UPDATE – Crypto fans come calling
The typical push-back after the bitcoin price plunge has begun with Joe Magyer, CIO of Lakehouse Capital, saying that bitcoin is still the biggest player in the crypto playgroound.
Speaking to CNBC, he said: “I think you’re likely to see one big winner here and that’s probably going to be bitcoin because it was the first cryptocurrency, it’s the most widely known.
“I think the reality is, given the network effects dynamics, I think you’ll find one ends up being one to rule them all.”
But Magyer warned that investors are getting too “greedy”.
See video below.
9.32am – UPDATE – Prices steady as UK workday begins
Bitcoin is up at $11,178, a rise of around $50 on the day so far.
Ripple is at $1.42, having recovered by 28 percent over the last 24-hours.
Ethereum is steady at $1,006 although that’s a $9 loss on the day so far.
8.53am – UPDATE – EU prepares red tap noose for bitcoin
EU chiefs are preparing a regulatory strangle for all cryptocurrencies.
Luxembourg’s Finance Minister Pierre Gramegna has suggested the European Union could soon unleash new cryptocurrency regulations.
The Luxembourgish minister hinted the European Union could follow suit to ensure bitcoin and other cryptocurrencies do not become a mean for criminals to launder money.
He said: “The dangers of anti-money laundering are known, there are other issues at stake.
“Europe will probably handle it together because, obviously, it’s something that touches upon the single European market so it has to be done at European level.”
The EU is often accused of trying to impose regulations on industries and areas of growth that they have never previously worked with and don’t really understand.
Speaking to Bloomberg, he said: “Virtual currencies are there to stay. They bring added services, they are convenient, they are more simple and so consumers love them.
“I think the regulators and the countries will have to monitor it and to regulate it to a certain extent. Certainly, more than it’s the case now.”
Bitcoin has risen to $10,903.
8.35am – UPDATE – Ripple founder suffers most from price plunge
Ripple’s co-founder and executive chairman Chris Larsen suffered a huge hit to his personal finances earlier this week ast XRP’s price dropped from its all-time high of $3.84 to under a dollar.
The price plunge wiped $44 billion from Mr Chris Larsen’s personal pot of Ripple.
According to CNBC calculations using figures from Forbes, with XRP trading near $1 yesterday, Larsen now holds the equivalent of just $15.8 billion.
On January 4, Larsen was worth $59.9 billion.
That made him one of the five richest people in the US and wealthier than Google’s founders, based on Forbes’ rich list.
7.40am – UPDATE – Three words no one wants to hear – ‘classic speculative bubble’
Bitcoin’s price rose overnight from a low of $9,200 to hit $11,761 before dropping back down to the price at the time of press of $10,789
It is excatly one month on from the price rise that saw bitcoin hit over $19,000 on the 18th December last year.
Ethereum’s price is at $927. Ripple is at $1.41.
In a new report from Captial Economics, economists Vicky Redwood and Kerrie Walsh outline in detail their reasons for believing that bitcoin will not replace cash, and frankly does not have a bright long-term future despite rising price and mainstream media hype.
They are more positive about the long-term prospects for the blockchain technology.
Reported in the Guardian this morning, Capital said that events over the last two days, “suggest that the bubble is bursting”.
They also fear that bitcoin’s price has a long way to fall.
Like a number of industry analysts, Captial are not convinced by bitcoin’s value as a commodity.
The authors said: “Most people are buying Bitcoin, not because of a belief in its future as a global currency, but because they expect it to rise in value.”
“Accordingly, it has all the hallmarks of a classic speculative bubble, which we expect to burst. Triggers for the bubble to burst could be a further crackdown by regulators or a major hacking attempt.
“When it will fully burst is anyone’s guess and prices could yet rise again, before they fall further ahead,” they added.
more to follow…