Cryptocurrencies, like bitcoin, have seen a significant decline in value despite President Donald Trump’s declaration of widespread tariffs, leaving investors and enthusiasts wondering about the market’s future.
Prices of the most popular cryptocurrency on the market, bitcoin, dropped 6.93% from last Friday to just above $74,000 in early morning trading Monday before rebounding to above $78,000 by the end of the day. The price of bitcoin had traded at more than $100,000 towards the end of January, according to Yahoo Finance. Prices were down to $76,700 in after-hours trading Tuesday.
While many cryptocurrency investors and enthusiasts had hoped that crypto would serve as a hedge against global market forces, Monday’s price declines showed that the trading market for digital currency is just as vulnerable. Still, some Long Island crypto proponents said the recent declines are a temporary setback for a market that is primed to become widely adopted.
Long Island Crypto Proponents Weigh in on the Recent Declines
- Craig Rudes, a partner at Long Island Blockchain, a technical consulting firm for blockchain technology, said that bitcoin prices are still around $80,000, which was a dream not too long ago.
- Rudes noted that bitcoin prices peaked at $104,669 on Jan. 25.
“Bitcoin is still a highly volatile asset, and its value can fluctuate rapidly. However, some investors believe that it has the potential to become a widely adopted form of currency in the future,” said Rudes.
Understanding Cryptocurrency
Cryptocurrency is a digital currency secured by cryptography, safeguarding it against counterfeiting. Crypto is hosted on decentralized computer networks using blockchain technology, according to Investopedia.
| Key Characteristics of Cryptocurrency | Description |
|---|---|
| Decentralized | Cryptocurrencies are not controlled by any central authority. |
| Blockchain Technology | Crypto is hosted on a decentralized computer network using blockchain technology. |
| Security | Cryptocurrencies are secured by cryptography, making them resistant to counterfeiting. |
Regulation and the Future of Cryptocurrency
While there is currently no “defined regulation” used to regulate crypto in the U.S. yet, legislation introduced last year seeks to bring cohesive regulation to the landscape, according to Reuters.
On Tuesday, The Associated Press reported that the Justice Department is disbanding a team of prosecutors who targeted cryptocurrency crimes and is shifting its focus away from complex crypto-related cases involving banking and securities law, according to a memo reviewed by The Associated Press.
Expert Opinions on the Value of Cryptocurrency
Some Long Island financial advisers, such as Mitchell O. Goldberg, president of Melville-based financial advisory firm ClientFirst Strategy Inc., said the value of crypto is not substantiated.
“It’s hocus pocus,” said Goldberg, who doesn’t advise on crypto investments for his clients. “I don’t think there’s anything that backs it up. It’s not a true asset.”
Connecting Cryptocurrency to the Traditional Investment Market
- Nick Selvaggio, partner at Long Island Blockchain, said that typically, when we see a strong market pullback in the traditional finance world, crypto usually mirrors that.
- “If we see the S&P dropping like crazy, bitcoin tends to drop like crazy, as well,” said Selvaggio.
- However, Selvaggio noted that the impact of markets tends to be more exaggerated with crypto markets.
“Whatever the Nasdaq does, or the S&P does, it does a magnified version of that,” said Goldberg.
Why Cryptocurrency is Considered a Safe Haven Investment
The beautiful thing about cryptocurrencies is that they are borderless, said Rudes.
“As a result, they can be free from national manipulation, he said.
“As turbulence continues, bitcoin will be looked at … as less risky,” said Rudes.
“The fact that it’s a global trade currency means it has value,” he said.
Investor Considerations
Some investors, such as Goldberg, caution against using crypto as a hedge against economic woes, or as a way to make up for lack of retirement savings.
“It’s the riskiest asset class on the planet still,” said Selvaggio, who is not a financial adviser.
He emphasized the importance of understanding the risks involved in investing in cryptocurrency before making any decisions.
Conclusion
While cryptocurrency prices have plummeted, it’s essential to consider the current market situation and the potential for a long-term recovery.
