In the last 24 hours, the price of a single bitcoin continued its recovery from recent lows and reached a high of $8,616.81 at 12:50 UTC.
At 13:25 UTC, it was trading at $8,386.65, an increase of 10.62% from its price a day ago. The current bitcoin price represents a 41% increase (or, approximately $3,400 in monetary terms) from its lows on Tuesday morning.
Among the top 10 most-traded cryptocurrencies, most were down. The honors belonged to bitcoin cash, which was trading at $1,226, up 20% from its price 24 hours ago, as of this writing. After its stellar performance last year, the seven-month-old cryptocurrency has mostly been on a downward slide in 2018. Its gains today are not enough to erase its losses: bitcoin cash’s price is still in the red by 51% from the beginning of this year.
Cryptocurrency markets briefly surpassed the $400 billion mark this morning, but were down to $392.4 billion at 13:30 UTC.
Is A Day Of Reckoning Coming?
According to a new note by Goldman Sachs, the value of most cryptocurrencies will crash or go down to zero. The reason? Correlations. (See also: Which Cryptocurrencies Will Survive A Crash In The Markets?)
Within the context of cryptocurrencies, correlation refers to the relationship between a blockchain platform and its tokens. As an example, consider the vast number of tokens and decentralized apps that have been generated from ethereum’s blockchain. Ripple and Stellar also use similar underlying technology.
“Because of the lack of intrinsic value (in some correlated currencies), the currencies that don’t survive will most likely trade to zero," writes Goldman Sachs’ Steve Strongin. "Most, if not all, will not see their recent peaks again."
Further proof of the correlation might be present in a Wall Street Journal article yesterday, which outlined the dismal performance of altcoins in the wake of a recent price crash. The flipside to the crash is the emergence of winners, who will go on to dominate the cryptocurrency ecosystem. Strongin likens the event to the dotcom bust which gave us the likes of Amazon.com Inc. (AMZN) and Alphabet Inc. subsidiary Google (GOOG).
But he has not provided a timeline for the shakeout in crypto markets.
At a conference yesterday, Barry Silbert, a bitcoin billionaire and founder of Digital Currency Group, predicted that there will be “only one digital gold, only one smart contract platform, only one privacy-focused coin…” in 20 years. (See also: Cryptocurrency Billionaire Rankings: The Richest People In Crypto.)
Institutional Money Is Making Its Way Into Bitcoin
Slowly but surely, institutional money is making its way into bitcoin.
Billionaire Michael Novogratz, who has invested approximately one-third of his wealth in cryptocurrencies, has reportedly raised $250 million so far for his crypto merchant bank during the recent price crash. A marquee name, Foxconn founder Terry Guo, is also among the investors.
This is good news for cryptocurrency's price volatility. Institutional holders generally invest large amounts of money for long periods of time, thereby stabilizing prices and protecting price movement from fickle day traders who move in and out of their positions several times in a day.
Bitcoin futures were expected to stabilize price movements for the cryptocurrency but the lack of big-name investors and low volumes of trading has ensured that they follow, instead of lead, spot exchange prices.
And there might be more good news on the way. Again, Barry Silbert alluded to the construction of infrastructure to facilitate Wall Street access during his interview.
“Behind the scenes, infrastructure is being built - on ramp, off ramp – to enable Wall Street to access this asset class in ways that you cannot imagine,” Silbert said, predicting that a “tidal wave of capital” from asset managers around the world will make its way into crypto markets in the next 12 to 24 months.
Google Searches For Bitcoin Decline
Interest in bitcoin on Google has come down. Media mentions and Google searches were considered among the drivers fueling its price rise in December 2017. The decline might be a mixed blessing for bitcoin. The waning interest in bitcoin is reflected in its price. But the current decline has also weeded out short-term traders only interested in a quick buck.
Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns small amounts of bitcoin.