Bitcoin Wavers

If Bitcoin bulls got excited about the recent move up, Thursday’s action extinguished some of this excitement. But it doesn’t come as a surprise to our readers. This one day of strong depreciation can be seen as an indication of things to come. But are these things bearish?

Bitcoin remains on the fringe of the financial system. The Bank of International Settlements (BIS) has recently issued a warning on Bitcoin. In an article on the Forbes website, we read:

In another blow to bitcoin and cryptocurrencies, BIS warned investors and traders that they could lose money on privately minted cryptocurrencies like bitcoin.

BIS, which serves as a lender to country's central banks, found most countries regard bitcoin and cryptocurrencies as a niche technology and not the future of money that many crypto enthusiasts believe it to be.

"No central banks reported any significant or wider public use of cryptocurrencies for either domestic or cross-border payments in their jurisdictions," the BIS report, out last week, found. "Usage of cryptocurrencies is assessed to be either minimal (‘trivial/no use’) or concentrated in niche groups."

The survey revealed that most BIS member central banks think cryptocurrency use "will remain minor" due to "low retail acceptance, compliance issues, better public understanding by the general public of the risks involved and, for some jurisdictions, outright bans."

The factors the BIS mentions are not new ones. They are the hurdles that have been present in the Bitcoin market for years now. The warning itself also reads like warnings we have seen come out from other regulatory or financial organizations. What’s a bit distinct is the tone of the warning in that central banks seem to think that Bitcoin is bound to remain a niche technology. Whether this is true or not remains to be seen and no one can tell with certainty. This doesn’t necessarily mean that Bitcoin can’t be an attractive asset. The fact that it is not correlated with traditional asset classes suggests that digital currencies have a role to play in the financial market. So, we certainly wouldn’t dismiss Bitcoin out of hand.

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