Bitcoin has had a rough week as the digital currency lost 6% since last weekend. BTC fell sharply as the cryptocurrency sell-off that has gripped the market for months continues. For many crypto experts, the hopes of putting the crypto winter bear market to bed is looking like it might not come to fruition.
With ripple and ethereum also losing 11%, the best performing crypto has been Tether, a stable-coin that’s literally tethered to the U.S dollar. Tether has seen itself climb into the top five cryptocurrencies by market capitalization, just north of $2 billion.
While the market cap metric isn’t a perfect gauge for positive or negative measurement, the rise of Tether is definitely telling of investor sentiment at the moment. The general consensus is if traders fear volatility in the crypto market and want to reduce risk, the default option at many exchanges is to swap out seemingly-weakened currency for Tether, for obvious reasons.
Last week saw the renewed crypto sell-off, which brought the price of bitcoin as low as $3,322, as traders take the foot off the gas, and look for a stable sanctuary. One action that definitely didn’t quell fears is a dramatic warning issued by J.P. Morgan just last week.
J.P. Morgan’s warning about using cryptocurrencies to diversify from traditional stocks and bonds didn’t necessarily shock traders, as the banking giant has a long, anti-crypto history to go along with their warning.
“We have long been skeptical of cryptocurrencies’ value in most environments other than a dystopian one characterized by a loss of faith in all major reserve assets,” said J.P. Morgan’s managing director and analyst Jan Loeys.
“Even in extreme scenarios such as a recession or financial crises, there are more liquid and less complicated instruments for transacting, investing and hedging.”
On the flip side of opinions, Van Steenis told Bloomberg Television in an interview from the World Economic Forum in Davos, “I’m not so worried about cryptocurrencies “(Bitcoin and cryptocurrencies) fail the basic tests of financial services. They’re not a great unit of exchange, they don’t hold value, and they’re slower.”
It’s important to note, however, that it’s not all bad news for bitcoin, ethereum, ripple (XRP) and other major cryptocurrencies, with some pointing to bitcoin’s growing transaction rate as a cause for celebration.