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Current Bitcoin Price: $ 59,430.49

Cryptocurrencies face existential crisis as Bitcoin value tumbles

Cryptocurrencies face existential crisis as Bitcoin value tumbles

In the past month of October, Bitcoin has fallen by over thirty per cent, and a debate has been stirred since Central Bank issued digital currencies. In fact, the downfall has accelerated in recent days.

As a trading asset, Bitcoin has shown to move in sync with equities in a concise term of it; therefore the recent data of its downward graph is sparking some concern. And now people are contemplating whether Bitcoin is an indicator of risk appetite or a beneficiary of risk aversion.

Nonetheless, there is still a view abroad that Bitcoin and cryptocurrencies, in general, are a ‘safe haven’ for people just like they regard to gold. But if we look at the recent events, then they have failed to fulfil the purpose which was initially intended and as of now they not being actively used as a means of exchange. Very few retailers and consumers use them, and transaction costs are still very high.

Apart from that, the technology behind cryptocurrencies is also quite complex, which makes it difficult for most household to use or to perform. There is still fear of security in the common people, and for this reason, they don’t want to indulge themselves in it. For them using a crypto wallet, and mentally calculating crypto prices into daily currencies is too demanding; therefore they don’t want to come out of their comfort zone.

As an asset, a basic data analysis suggests that bitcoin has a low correlation with safe havens like gold, and it has been highly volatile over the past two years. And now the fall in bitcoin indicate the trouble in the cryptocurrency world, which excellently operates beyond the normal frameworks of governments and central banks.

Government from various countries like China and India have clamped down on the exchange of cryptocurrencies. More likely the next step for central banks in the cryptocurrency industry would be to issue their own digital coins. In addition, a thorough regulation, finer cross-border payment processes and more reliable identification mechanisms will be the part of central banks and government’s work.

All this slightly indicates that instead of becoming a safe haven, bitcoin might lose its credibility and become extinct in the near future.

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