“A malaise seems to have struck all cryptocurrencies recently. The extreme price gains from last year, certainly from a speculator perspective, have long since disappeared and in the very short term, we’re seeing a trend of downward moving prices.
“Generally, this comes at an important time for cryptocurrencies. Each week we move a step closer to the asset class becoming more mainstream, certainly in the financial world, as more officially regulated exchanges start trying to adopt either just pricing, or actual trading for cryptocurrencies. For example, only last week we heard positive news on the possibility of the Ether futures contract.
“However, again if we move on the price sensitive side to cryptocurrencies, we are currently trading at six-month recent lows.
“Ultimately, this leads to a contraction. Historically, increased availability from regulated entities for institutional investors/traders should, arguably, lead to an increase on speculation in terms of price. This hasn’t materialised and in fact, we have the opposite. Overall the asset continues to be widely popular, but again this is a contraction in terms for the actual use of the asset. Firstly, we have the speculators, largely trading on the intraday/week movements, and secondly we have users performing monetary tasks with cryptocurrencies, such as buying a coffee with Bitcoin.
“While it shows the number of different uses for the asset, it also highlights the issues surrounding Bitcoin. For a genuine monetary tool, like fiat currency, you shouldn’t have 5% or 10% movements. Ideally it would be stable and consistent. But also for the use as a monetary tool, the asset needs to decide if it’s a genuine form of exchange or a turbo-charged speculation tool. It can’t be both and the latter leads to issues with what I call opportunity cost. If you’d bought a coffee with your Bitcoin wallet five years ago, it’s likely that coffee could have bought you a car, a very nice car even, at today’s prices.”