Angus Champion de Crespigny, Americas blockchain leader at Ernst & Young (EY), told Bloomberg that institutions in the cryptocurrency space need to have a long-term plan — which they probably already have. He added that institutions do not have the tendency to implement products overnight, so any change in Bitcoin value now or in the future will not impede long-term strategies.
Subscribe to the Bitsonline YouTube channel for more great videos featuring industry insiders & experts
Champion de Crespigny also warned that heavy fluctuations in Bitcoin value were always likely to happen. However, the big question at this point is, how can institutions measure risk when providing access to such a volatile asset for clients.
“Any asset that triples in price in three months you have got to consider is fairly volatile and has a chance to the opposite. The only thing you can say about the market right now is that there are more sellers than buyers and everything else is emotion,” he said.
The bitcoin price descended for five consecutive days, building panic among crypto traders. Bitcoin price fell below $7,000 USD, 60 percent down from its all-time high. It was the first time since November 2017 that Bitcoin price fell below $7,000. However over the past 24 hours it rebounded slightly and now sits around $7,500.
Many commentators suggested the plunge in crypto prices across the board resulted from the decision of several banks in the U.S. and U.K. to halt purchases of digital currencies using credit cards. Recently, Lloyds Banking group stopped the purchase of bitcoin via their cards. Bank of Scotland and Halifax followed suit.
Following the bank bans, Virgin Money also banned customers from purchasing cryptocurrencies using its credit cards. Banks claimed it was due to the credit risk encircling the falling value of Bitcoin and other digital currencies.
Champion de Crespigny said of the bans: “it is a very volatile asset to put on credit. I am not sure if that’s nearly necessarily gonna be playing into the price action that much.”
Moreover, he suggested that buying cryptocurrencies on credit may even have spiked the price to the $20,000 mark. However, he noted it is impossible to know how much of that actually drove the price.
In the past when Bitcoin was at its peak, Bitcoin presented a potential new financial product for institutional investors. However, at the same time bitcoin’s volatility suggested irrational exuberance and people were investing in something they didn’t really understand or know about.
Recently, vocal bitcoin supporter John McAfee reminded everyone that the price was still relatively high compared to a short time ago.
Please God people – get a perspective about the market! The price of Bitcoin today is still higher than it was just three months ago! In a long term view, Bicoin is still climbing. Forget about these short term ups and downs. If you are a short term investor, you need to get real
— John McAfee (@officialmcafee) February 4, 2018
Cryptocurrencies are very volatile assets, hence investors should plan a long-term strategy and understand something of the tech they’re buying into, before investing in cryptos.
How soon will Bitcoin bounce back to $14,000 mark? Let us know your opinion in the comments section.
Images via Bloomberg