In today’s bitcoin in Brief, internet security expert John McAfee expects bulls to come back to the crypto market, despite recent drops in prices across the board. Billions will be pumped by institutional investors, he predicted in a tweet. Meanwhile, a new study has shown that the mood of investors, rather than economic indicators, actually determines the value of cryptocurrencies. Also, do you want to know when Paypal will support crypto payments?
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Institutional Investors to Pump Billions in Crypto
John McAfee expects a bull run on cryptocurrency markets in the near future. Billions will be pumped by institutional investors, the internet security expert predicted in a post on the microblogging platform Twitter this week. McAfee claims this will lead to significant changes in the market capitalizations of the leading cryptocurrencies, but also those of most altcoins.
“Institutional investors are preparing to enter the cryptocurrency market with a vengeance,” McAfee said in his . He explained that they are generally long term investors that will spend billions on the market. “Expect the top ten coins to go through the roof fairly quickly. The bulk of altcoins will soon follow,” the software guru wrote. Admitting he had no more information than his followers, John McAfee advised them to check the recent news and use their heads.
McAfee was probably referring to several recent announcements indicating possible developments in that direction. Earlier this month, suggested that Goldman Sachs is going to launch a bitcoin trading operation to buy and sell bitcoin futures on behalf of institutional clients. More recently, US crypto exchange Coinbase new services meant to attract big money players such as crypto hedge funds. The plans include the launch of a crypto custodian service and a suite of tools specifically designed for institutions called Coinbase Prime. The San Francisco-based company has also with regulators the possibility to apply for a banking license.
However, McAfee’s optimistic prognosis coincides with the return of the bears to the cryptocurrency market. The price of bitcoin (BTC) has just dropped below the $8,000 mark, hitting a month’s low. bitcoin Cash (BCH) is currently trading at over $1,000 (at the time of writing). John McAfee has previously that the price of bitcoin will reach $1 million USD by the end of 2020.
Study: Investors’ Mood Determines the Value of Cryptocurrencies
According to a new study published by Warwick Business School, the value of cryptocurrencies is determined primarily by the mood of investors and not so much by economic factors or indicators. Assistant professor of finance Daniele Bianchi has found that the price patterns of the 14 largest cryptocurrencies reflect past returns of investors, combined with the hype and emotion experienced as they watch the value climb or fall. The research is titled “Cryptocurrencies as an Asset Class: An Empirical Assessment,” the Independent reports.
According to the author, this behavior can be attributed to the fact that bitcoin and other cryptocurrencies fall outside the remit of governments or financial institutions. Investing in digital currencies is therefore more similar to buying equity in a high-tech firm rather than a normal currency, he notes. Bianchi also points out that the study shows limited similarities between bitcoin and gold. At the same time, because of the high volatility of the prices of the biggest cryptocurrencies, they can hardly be seen as a reliable savings instrument.
CFO: If bitcoin Gets ‘Better’, Paypal Will Support It
John Rainey, the Chief Financial Officer of Paypal, has stated in a recent interview that the payment platform will proceed with a bit more caution towards cryptocurrencies. At the same time, he admitted that if cryptocurrency stabilizes in the future and becomes “better currency”, his company will “certainly support that”. Rainey added that the volatile crypto swings threaten the viability of the businesses Paypal is working with.
“If you’re a merchant and you have, let’s say, a 10 percent margin on a product that you sell and you accept bitcoin, for example, and the very next day it moves 15 percent, you’re now underwater on that transaction,” Paypal CFO told CNBC. “You could have something that appeals to consumers, but if merchants don’t accept it, it’s of little value. Right now, we don’t see a lot of interest from our merchants. But if it’s something that stabilizes in the future and is a better currency, then we’ll certainly support that,” Rainey elaborated.
Despite Paypal’s current position on cryptocurrencies, a recent patent filing revealed that the payment provider might be considering expanding its exposure to the crypto ecosystem. Reports came out in March this year that Paypal has filed a application with the US Patent and Trademark Office for an “expedited virtual currency transaction system”. Back in 2016, it was reported that the company had applied for another crypto-related patent – one that envisages the development of a payment module accepting bitcoin, litecoin and dogecoin.
What are your thoughts on today’s topics in bitcoin in Brief? Let us know in the comments section below.
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The crypto market looks to be in no mood to give investors a relief. Today, the world’s largest cryptocurrency bitcoin has slipped below the crucial support of $8K today, on May 23. This marks bitcoin’s price hitting a 35-day low wherein bitcoin has corrected by almost 20% from its high of $10000 on May 6, 2018.
At the press-time, bitcoin is trading at $7864.47, a 4.5% down from its price in the last 24 hours with a market cap of over $136 billion, according to the data on However, it’s not just bitcoin alone which is facing the brunt. The overall market cap has corrected by more than $40 billion in just the last three days of time. According to the one-month chart on , the overall market valuations have corrected by more than 25%. The one-month peak of the market was on May 6 where the overall valuations were $470 billion. Today, the overall valuations have fallen to a low of $343 billion.
However, bitcoin is still trading at a 30% premium to its 2018 low of $5,947 seen on Feb. 5. Although bitcoin has managed the latest correction below 5%, all other top-ten altcoins on the index have slipped nearly 7-8%.
The second-largest cryptocurrency by market cap Ethereum has corrected by more than $100 in the last two days and is currently trading close to $600. At the press time, is trading at $619 with a slippage of over 10.5% in the last 24 hours. The current market cap of the cryptocurrency stands at $61 billion.
On the other hand, bitcoin Cash and Ripple have hit their one-month lows which are now trading at $1044 and $0.63 respectively, at the press time. The crypto markets started correcting significantly last week itself during the Consensus 2018 conference. Although the conference witnessed a record number of attendees, the crypto markets didn’t respond due to the enthusiasm.
Fundstrat analyst Tom Lee who had early predicted a bull run in the market before the conference, however, had to own up his later on. While talking to Bloomberg, Lee said:
Crypto still faces significant internal resistance and hurdles within traditional financial institutions, but it is encouraging, nonetheless, that a large share of incremental attendance are financial institutions.”
Lee also took to his Twitter account stating three possible reasons that turned out to be against his earlier predictions. HE wrote: “CRYPTO: #Consensus2018 rally did not happen, very disappointing. What we needed was a trifecta of progress: (i) institutional custody/tools; (ii) buy-in by banks/investment managers; (iii) regulatory clarity (3 of 3 needed), but we got progress on (i) and (ii).”
However, Lee still remains bullish on his predictions and thinks that bitcoin can hit $25000 by this year end. Lee said that there is a lot of positivity in the space with institutional participation growing. He said:
It is obvious that crypto still faces significant internal resistance and hurdles within traditional financial institutions. In our many conversations with institutional investors/banks, we find that specific teams may be enthusiastically committed, but widespread internal acceptance of crypto/blockchain faces hurdles”
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