One small voice of calm emerged from Davos, Switzerland, where the World Economic Forum recently met. Jeet Singh, a portfolio manager who has worked for more than six years in the cryptocurrency arena, pointed to the massive and rapid market capitalization of the currencies. He offered a somewhat soothing contextualization of the recent bloodbath over bitcoin.
In the space where startups start talking billions, Singh felt that the kind of volatility bitcoin has experienced is not unusual nor unexpected.
Apple, Microsoft, Bitcoin
Singh pegged his expectations for bitcoin to around $50,000 for 2018, reassuring those gathered that the wild melee around bitcoin is typical of startups with intrinsic value or wild promise. Bitcoin seems to have both.
Many would say the issue is muddied as blockchain has the value, whereas cryptocurrencies are a flash in the pan. They express the sentiment of needing to view the two phenomena as separate things. A difficult one, when cryptocurrencies and the blockchain construct are so inseparable, especially in the mind and jargon of the average citizen.
His voice comes as the global formal banking sector softens somewhat on cryptocurrencies, with many recently emerging as blockchain enthusiasts. While often still wary of fully endorsing cryptocurrencies, business sees the value of the blockchain, and banks are no exception.
The Bitcoin market is currently muted in comparison to the heyday of November 2017. Regulatory rumblings are gaining volume across the globe. That said, the proliferation of mining rigs abounds and imports, especially in Southeast Asia, are climbing rapidly.
Singh sang a convincing tune, “If you look at Microsoft or Apple when they went public… their stocks were very volatile because the market wasn’t mature.” Commenting on the recent large influx of bitcoin traders and the relatively stable (and static) current price, Singh observed that traders who “got there at very late stages are losing money.”
Typical of “coming in on the short,” looking at a typical trading graph where there is long, gentle upswing followed by a short, sharp drop in price, latter-day traders are not experiencing meteoric euphoria.
Some have even lost money. They’ll have to wait it out, holding on through the downswing until sentiment drives the price up again. This has all given rise to a bit of speculative ballooning, which “doesn’t bother those who’ve been there for a very long time because they are used to the volatility,” Singh said.
All Players in the same game
Describing cryptocurrencies as currently being employed as a novel store of value, he added that people adopt a buy-and-hold strategy on the deflationary currency which gains value over the longer term. Demonstrating his assertions, he pointed to the fact that “There are not so many vendors right now who accept cryptocurrencies.”
Against that actual usage statistic, he added that there is, however, “huge adoption on the black market.” A country’s own forex value might also impact perceived values of cryptocurrency. In Thailand and Indonesia, for example, where citizens have issues with the national currency and inflation, this generates a warmer welcome towards cryptocurrencies. People in these two countries accept bitcoin far more readily than many others in the world.
“In different countries, Bitcoin is qualified differently,” he said. More purely employed in Switzerland as a transactional currency, although not due to any national currency volatility there, it is viewed overwhelmingly as a stock in the USA. “To me, it’s more than a currency,” Singh added.
The aspect of Singh’s comments that probably gave most credibility to his analysis was the fact that he didn’t sing a tune all daisies and butterflies. In spite of the fact that “… we will probably go through a suffering period of volatility,” he felt “bitcoin could definitely see $50,000 in 2018.”