A significant comebackTrue, there may be a sting in the tail of eBay’s decision as far as the established cryptocurrencies are concerned, in that it is reported to be considering launching its own virtual money. This forms part of a background of increasing competition, especially for Bitcoin.
Threat from withinSmaller fry are, by definition, less representative of the market. Members of their user groups may have specific characteristics drawing them to the currency in question, rather like “affinity” credit cards for favoured causes. That said, there is a similar pattern of a big price tumble followed by a limited but significant 2019 recovery.
TRON traded at $0.0724 on 15 May 2018, reaching a trough of $0.0016 on 27 November and is currently trading at around $0.0287. NEO was worth $67.98 on 15 May 2018, falling to $5.65 on 14 December and is currently trading at nearly $12. Stella was valued at $0.3691 on 15 May 2018, skidded to $0.0772 on 8 February and now trades at $0.1136. Finally, EOS was selling for $14.16 on 15 May 2018, dropped to $1.72 by 7 December and is currently worth nearly $6. No single factor explains the cryptocurrency rally any more than a single factor lay behind the spectacular fall from favour seen last year. Increasing regulatory interest on both sides of the Atlantic took some of the bloom off what had been seen, in 2017, as the payment system of the future. The prospect of higher interest rates made cryptocurrencies less attractive in relation to “real money”. And the reluctance of some cryptocurrency promoters, notably “Satoshi Nakamoto” – supposedly the founder of Bitcoin – to make themselves known emboldened commentators to suggest cyber money was, in part or in whole, an enormous fraud. Initiatives such as eBay’s acceptance of cryptocurrency in payment have helped dispel such suggestions, while the U-turn on higher interest rates from the US central bank, the Federal Reserve, has stalled the expected rise in the attraction of dollar assets. The third factor, regulatory interest, has not been reversed, as we shall see shortly. But an equal threat to the cryptocurrency revival comes from within the industry itself. Until recently, it was assumed that the number of cryptocurrencies – estimated at about 1,600 worldwide last year – would shrink as the type of consolidation seen in every other once-new industry, from car manufacturers to consumer electronics, took hold. But if anything, the trend has been the other way, and Reuters estimates the total number of “altcoins”, or ‘alternative to Bitcoin’, currencies at 2,000.