So much for the Blockchain Week bump.
With thousands of cryptocurrency diehards swarming into Manhattan for this week’s Consensus 2018 conference, the prediction from bitcoin bulls such as Tom Lee of Fundstrat Global Advisors was that the hype-fueled gathering would trigger a market rally.
Alas, not even a trio of rented Lamborghinis, a 1,000-person yacht party and a performance by rapper Snoop Dogg could prevent the value of virtual currencies tracked by Coinmarketcap.com from sinking by US$52 billion since May 11.
Bitcoin, the most popular of the bunch, dropped 5.2 percent this week to US$8,003.60 even as Arthur Hayes — the crypto exchange executive whose firm rented the Lamborghinis — predicted a surge to US$50,000 by year-end.
This week’s slump is far from extreme by crypto standards, but the market’s resistance to Blockchain Week’s ballyhoo highlights one of the chief concerns among virtual currency pessimists: that most people who are going to purchase the coins have already bought in after last year’s epic surge.
While bulls point to a vast pool of pent-up demand from professional money managers, it is far from clear whether regulations in the US and elsewhere will evolve in ways that encourage institutional investors to jump in. Many Wall Street pros have dismissed the market as a speculative bubble, while Berkshire Hathaway Inc chief executive officer Warren Buffett likened bitcoin to “rat poison squared.”
For Sunny Lu, the chief executive officer of blockchain-based logistics company VeChain Tech and one of the conference speakers, the losses might have been the result of unmet expectations over the quality of presentations at Consensus 2018.
“The quality of projects and speakers were not really as good as expected,” Lu said. “I guess people just got disappointed.”
Meanwhile, less than four months after losing an unprecedented US$500 million of virtual coins to hackers, Japanese cryptocurrency exchange Coincheck is plotting its comeback.
Under new leadership after a fire sale to brokerage Monex Inc, Coincheck has been spending heavily to improve security and restore confidence among clients who withdrew at least US$540 million in the wake of the hack.
Monex chief executive officer Oki Matsumoto said he expects the exchange to secure an official license in Japan next month. He is also planning to bring Coincheck’s platform to the US.
Matsumoto, who declined to specify a timeline for the US expansion, has a lot riding on his crypto bet: Monex shares have surged 98 percent since news of the Coincheck takeover emerged last month, the biggest gain in Japan’s benchmark TOPIX.
His plans for the US might strike some as odd given that the country is typically seen as less friendly toward virtual currencies than Japan, but Matsumoto said that might be about to change.
“Japan may seem like it’s one step ahead in crypto, but in terms of deciding what’s a security or a token and attracting institutional investors, the US and Europe are moving ahead,” he said.
A highly anticipated decision by US authorities on whether to classify coins such as Ether and Ripple as securities, commodities, or something else would create the regulatory clarity necessary to attract more investors to cryptocurrencies, even if the move leads to more stringent oversight and a short-term sell-off, Matsumoto said.