Is this the death of crypto? 

“One side of the fence say that Cryptocurrencies are part of the future and the other says that Cryptocurrencies offer no real world value and it's worthless. We could therefore say, oh look, it's all falling apart and the side that said it's worthless are right, but in truth it's much more complex than that. We have just gone through the “introduction to crypto currencies” phase, meaning that now people know about them and know what they are. The next phase will be “application to crypto currencies”. This is where we will see a lot of either regulation come in, or some sort of body for the control of crypto come into the market.” 

“Currently the strongest currency in the world is the US dollar and it has been the standard for everything we do in trading.  At the moment, all commodities are quoted in dollars. There is a problem with that, which is that the United States and the dollar becomes much stronger. Because the dollar is tied to a country, this means the whole world is bound by that country's wealth and success. When the United States starts struggling, their currency starts struggling and there is no other currency we can go to – the pound isn't there anymore, the yen isn't there anymore – there is no dominant currency in the world we can rely on. So, let’s look at crypto as an idea to replace this. And for a while it worked. But it was unregulated and this then led to investors bothered with them and staying away.” 

“The different coins were valued randomly from a few cents to $60 000 each. That bothers those into crypto trading. That doesn't make them feel safe. It doesn't feel like clean money. It feels like hype.” 

“Is Crypto out there? Yes. Is it being valued? Yes. Is it the new standard? Well, there is a big question mark. Markets hate big question marks, and for as long as that question mark remains, you will always see big sells offs.” 

Will HODLing save crypto? 

“This depends on how big that holding community is? Is that community big enough to a) Maintain its bottom? Or b) Sustain its growth? Ultimately, this faithful community is going to have to come up with some way to overcome these ridiculous swings in the market. A person cannot live with a currency that has a $10 000 range on a weekly basis.  The question is therefore, not, can they save it? But rather, will they employ the kinds of standards that can save it? It's about whether they are capable of injecting trust and will into these types of currencies.” 

“There is something that echoes this in history. In the 1920s people actually stormed the banks to get their money. And the banks physically changed their architecture. These days if you look at a photo of a bank after that, you can see they now look something like a roman castle. They are marble behemoths that resonate safety, security, The bank is intimidating. The bank is a safe place to put your money. And that's what crypto is going to have to do. Rebrand. Give people the sense that they are safe.” 

Is this the dotcom bubble of crypto? 

“This resonates almost perfectly with the dotcom bubble and crash that followed. Names like Amazon went from a $20 stock and went to a $400 stock in 1999 to 2000, and then went down to $6 a share. If you had bought a share back then at $6 you would have about $3500 dollars now after all the splits. So yes, there will be a comeback for crypto, but the question is how long will this take? And which ones will come back?” 

“Just because a company is called Bitcoin doesn't mean they will be the ones to come back. This stage of the dotcom bubble bursting saw the companies succeed that went away, looked at what they did, and then came back and did it better. For example, in 2000 Google was not a name yet. Google did not exist. But Google came out shortly after, in 2002 or 2003, and went public in 2004 at $125 a share. They had a better product and made it free for the public and changed the world.” 

Does the world need crypto? 

“I am not sure that it does. If we want untraceable transactions, we have cash for that. And I like that. It adds liquidity to the market that we otherwise wouldn't have. If Big Brother is watching all the time, it's too much information on each individual. I don't like the way crypt currencies show you the entire history of who did what with what. There is a breach to privacy like that, which is seldom discussed. Imagine if a person has an embarrassing rash, and they buy a cream using crypto, well that's logged on the block chain now forever. This is now public information.”

By Fred Razak,

Chief Trading Strategist at CMTrading 

CMTrading is the brand name of Global Capital Markets Trading Ltd (A Seychelles company)