I’m Dreaming of a White Knuckle, Cryptocurrency Christmas

cryptocurrency

The end of the year, usually associated by a very large segment of the world’s population with the winter holiday season – a time of peace and love on Earth. For cryptocurrency enthusiasts however, this holiday season brought anything but piece of mind, as excitement over the monster rally that saw Bitcoin scrape the $20,000 mark, gave way to consternation as the above-mentioned rally began to run out of momentum and eventually saw Bitcoin’s price plummet all the way back roughly the $13,000 level.

While far from being the catastrophic crash or bubble pop that the augury of cryptocurrency naysayers envisioned, the recent decline of not just Bitcoin but all major digital currencies, has badly rankled investor confidence and unleashed a wave of speculation as to what might be the main cause (or causes) behind the recent abasement.

Ironically, the star of the initial rally and later the focus of investor anxiety, has not been the golden child of the cryptocurrency world – Bitcoin – but rather its slightly less glamorous and famous cousin – Ripple.   

Over the weeks leading up to the New Year, Ripple Ripple’s market capitalization shot up from $40 billion to $88 billion. In the days immediately after the New Year, Ripple overtook Ethereum to become the second largest cryptocurrency in the global market, becoming the first “altcoin” to reach a $100 billion market valuation.

The addition of the Ripple to Bloomberg’s price terminal in mid-December, was arguably one of the major factors that started the substantial rally.

Another important factor was the announcement of a formation of a strategic partnership between Ripple and several large Asian financial institutions, including the Thai banking giant – Siam Commercial Bank (SCB) – as well as Japan’s SBI Remit.

While it is true that to date, no major banks are utilizing the Ripple’s blockchain network on a daily basis to process transactions, the network already saw some use by several large banking institutions. Banks in Thailand and Japan for example, have already been processing near-instantaneous transactions for many months using Ripple. Earlier this year, major Swedish bank SEB settled $180 million on the Ripple blockchain network by sending cross-border payments on behalf of high profile clients.

The fact that Ripple did manage to catch the eye of major financial organizations is perhaps logical, considering that the technology behind Ripple was very intentionally aimed at large institutions. Other cryptocurrencies also felt the boost, especially in combination with the news that the Chicago Mercantile Exchange (CME) as well as the The Chicago Board Options Exchange (CBOE), would start operating Bitcoin futures in December.

The above-mentioned developments have lended an air of legitimacy to both Ripple and Bitcoin which in turn generated tremendous investor hype and spurred the price upwards.

However, some members of the cryptocurrency community voiced skepticism in regard to these developments, declaring that centralization is the absolute antithesis of what digital currencies should be about.

This skepticism grew louder and louder, as the cryptocurrency rally completely unraveled in the past few days and investor excitement turned into white-knuckle anxiety. Their pain became even more pronounced, as some early champions and adopters of Bitcoin seemed to be making a complete about-face.

In a severe blow for Bitcoin supporters, Microsoft Corporation has this week removed the ‘Bitcoin’ payment option from its list of payment instruments. The move was especially hurtful for some crypto-enthusiasts as the company was an early adopter, and former CEO Bill Gates had expressed his support for the cryptocurrency.

In order to not misrepresent things, it is very important to note that while Microsoft has been an early supporter of Bitcoin, the company always did so in very limited fashion. More specifically, it only offered select digital products in exchange for Bitcoin, and mainly to US customers only. Microsoft still accepts Bitcoin, but users now can only use it to pre-fund their account balances, where it would be instantaneously converted into US dollars. Clients may no longer use Bitcoin directly to purchase any products.

Evidently Microsoft’s temporary attempt to accept Bitcoin as a method of payment was just a trial to see how things would turn out. But now it seems things turned out significantly less rosy than initially anticipated.

The confirmation of this came from a recent chat between reporters and Microsoft support staff, during which the staff admitted that the Bitcoin payment option has been revamped. Moreover, they went on to claim that this has been planned for some time now, as a response to the ongoing network issues plaguing Bitcoin, including high fees and transaction delays. Microsoft has been monitoring these issues for quite some time now, but instead of getting better, they have persisted and not improved. In fact, the situation is growing worse every month, the staff went on to comment.

While more emotional investors have decried recent developments, cooler heads have suggested that perhaps investors may simply be cashing out a little, after seeing gains of over $5,000 per coin.

It seems that Bitcoin and its digital cousins are at yet another crossroads, with the boisterous rancor about its future, between its supporters and detractors, once again rising to a fever pitch. The stage is therefore set for 2018 to be the year of intense debate and unexpected developments for the global crypto-community.