The end of crypto currencies? – Commerzbank
Ulrich Leuchtmann, analyst at Commerzbank, points out that the depreciation of crypto currencies accelerated in 2018 and after the realisation that crypto currencies are unsuitable as currencies it has now also become obvious that many are also unsuitable as a means of payment.
Key Quotes
“2018 might constitute the beginning of the end of bitcoin and that of many other crypto currencies.”
“2018 was an annus horribilis for crypto currencies. As far as bitcoin (XBT), the by far most liquid amongst the crypto currencies, is concerned, the drama started to unfold at the beginning of the year. The speculative bubble, that had started to show signs of cracks in December 2017, burst completely in January. Following a brief bounce (16.753 on 5th January) the USDXBT exchange rate dropped to 7.101 within the space of one month, or until 5th February.”
“The mother of all crypto currencies therefore lost almost 58% of its value within one month. In other words: the price of goods expressed in bitcoin recorded a rate of inflation of approx. 175% over that month. That would have been a staggering 17.5 million percent on an annualised basis. For a currency, whose proponents promote it as a protection against the risks of inflation of standard currencies, I find that an impressive figure! Bitcoin was unable to recuperate from this blow all year.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
