There might be a day when bitcoin and cryptocurrency markets are in a celebratory mood. Today is not one of those days. Bears, who’ve wrested control of the markets, exerted further pressure in the last 24 hours.
After moving sideways around the $8,000 mark, bitcoin’s price has fallen below that support level. At 16:32 UTC, bitcoin was changing hands at $7,898.14 per pop, an increase of 1.39% in the last 24 hours. On a weekly basis, that’s an 11% drop in its overall price.
The top 10 cryptocurrencies mostly followed bitcoin’s lead. Litecoin, which said it was shutting down work on its payment app LitePay recently, was the biggest loser. It registered a 7.1% drop in its price. But that’s not saying much, when you consider performance of top 10 crytocurrencies since the beginning of this year. All of them are in the red and have registered double-digit declines in less than three months.
Their performance is reflected in cryptocurrency markets, which mostly moved sideways in the last 24 hours. As of this writing, their total valuation had edged to $299.7 billion, an approximate drop of $10 billion from last week’s valuation.
Even as the Federal Reserve is rumored to be developing its own cryptocurrency, officials at the agency are mostly pessimistic about in their public pronouncements about its prospects. According to a Bloomberg report, Atlanta Fed Chair Raphael Bostic advised young entrepreneurs at a forum to not invest in cryptocurrencies. “Don’t do it,” he told them. “They are speculative markets. They are not currency. If you have money you really need, do not put it in these markets.’’ Bostic’s comments follow those of Minneapolis Fed President Neel Kashkari, who compared bitcoin to the Beanie Babies fad, and Charles Evans, President of the Federal Reserve Bank of Chicago, who said bitcoin was not “money-like” at the moment.
Taken together, these comments might sound ominous. But there is a case to made for cryptocurrencies within the current economic system.
The Federal Reserve has a dual mandate: to control inflation and ensuring optimal employment through monetary policy or disbursal of paper notes within the general economy. But paper notes are difficult to track and anonymous. Introduction of a digital currency will make it easier for the government agency to track supply and simplify the process of disbursal through the economy. It might even herald some big-term changes, such as the introduction of a Universal Basic Income (UBI) into the US economy.
That is why it is interesting that Fed officials have chosen to comment on the speculative nature of cryptocurrencies, instead of its utility within mainstream economies.