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We are now a bit far from deeper analysis concerning the actual cause of bitcoin slump on stock market. Nevertheless, there is a chain of causes evoked impressive rise of BTC price in December 2017: launching the BTC futures trade on Chicago’s Cboe Global Markets and later on CME Group. It was the first effort to regulate naturally its value since the future traders can choose compulsory liquidation that could force the price of BTC as well as other cryptocurrencies. In December 2017 the price of BTC started to raise dramatically up to its all-time high over 20.000 USD. Analysts as well as the world was caught off-guard. The fever has burst out. Almost 20 million people have virtual wallets and the business amount of crypto market has reached 750 billion dollars, while bitcoin dominates the market with its almost 40% share.
Analysts differ in their conclusions concerning bitcoin futures market. Some regard it as worthless, others acknowledge it. There is no serious forecast due to extreme volatility of cryptocurrencies but we can say it is a milestone in bitcoin and crypto story.
In last weeks we have been witnesses of dramatic free fall of key cryptocurrencies on the market: bitcoin dipped under 10.000 USD, its crown prince Ethereum sunk almost 40 % down from its December position and Ripple even deeper. At the beginning it was a threat of South Korean finance minister Kim Dong-yeon that the state will outlaw the cryptocurrency exchange trading to avoid gambling and speculations. This proclamation prompted investors to sell-up, since South Korean stock market with cryptocurrencies represents 20 percent of all daily bitcoin transactions. After a while The South Korean Fair Trade Commission (KFTC) chairman Kim Sang-Joo has confirmed KFTC does not have the authority to ban cryptocurrency stock market although it is currently investigating major currency exchanges.
Meanwhile the situation worsens, when China’s officials proclaimed that China wants to expel BTC miners from the country because of huge energy consumption as well as due to massive outlaw of financial capital. Moreover, the authorities got worried about the fact cryptos can be used for frauds and money laundering.
After a calamitous information and slump of market some analysts think bitcoin and other key crypto players recover soon. January fall represented just an inevitable correctness of the whole market. Investors now accept the fact some states are planning control over exchanges.
Charles Hater on website CryptoCompare said: “The market has been carnage and a lot of investors are starting to take a step back and breathe a sigh of relief as the price has stabilized.” According to other experts it is a good time to buy cryptocurrencies again. There are some forecasts (e.g. Wall Street strategist Tom Lee) saying bitcoin has not reached a peak yet, but plenty of them warn bitcoin’s price is driven entirely by speculation and as such it could be harmful for investors.
Asset backed cryptocurrencies
In spite of the January market slump, it can be expected that cryptocurrency market is growing (fast), however it needed to consolidate somehow and get rid of too much speculation that springs from investors’ excessive expectations. After the Korean-Chinese rude awakening we can expect growth again, though not as rapid as last year.
Along with bitcoin and other cryptocurrencies, however, the dollar has weakened too, while gold has now reached a few-month maximum, and in the past month its price has risen by 7.5 percent. On the background of bitcoin, many investors responded by seeking to exchange their crypto assets for gold as a more reliable asset. Daniel Marburger, director at CoinInvest, said: “We think increasingly people are realizing that digital assets have much higher risk levels than the traditional safe haven asset.” He even sees some similarities between bitcoin and gold: “Both are limited in quantity, easy to trade and you can store them decentralized.”
It is clear that more and more small investors (ordinary people) are aware of the risk associated with the excess volatility of cryptocurrencies compared to traditional assets. But there is another one, we can say the compromise path. There are several cryptocurrencies backed by some asset, however one of them includes very specific traits: OneGram is backed by real gold asset! As its founder, Ibrahim Mohammed Khan put it: “Main criticism of cryptocurrencies is lack of enough transparency. There are no rules, regulations, authorities. So this situation led me to consideration: the oldest form of money is gold. Whenever the market is going down, collapse or there is a danger or a worry, governments and everybody believe in gold. So why not to take the oldest form of money, which is gold?”
This new currency was sold within ICO last year for the then price of gold plus 10% premium fee, hence the holder received one gram of gold, not paper one, but physical one gram. The transaction architecture is put the way each transaction allocates a bit of physical gold and it serves the aim to raise more and more physical gold. Each transaction thus represents more asset serving to back the currency. I see the future of crypto-market mainly in such form of backing. Moreover, when you take into account the fact that MAG, one of the key developers and investors in Middle-East area offers its customers the possibility to purchase some real estate for OneGrams, the result is real currency in circulation. I guess OneGram is a future of crypto-market since it is a good compromise for investors between too high risk connected with too high volatility of not backed cryptocurrencies such as bitcoin and traditional assets like gold, or between sheer speculation and real-time currency in circulation.