Bitcoin is “stronger” now than it was at the beginning of the year despite plummeting prices, according to a leading cryptocurrency expert.
Investors in bitcoin have suffered a particularly tough month, with the value of the digital token plummeting from $6,300 (£4,950) on 1 November to today’s price of $4,000 (£3,145), according to ranking site CoinMarketCap.
The recent downturn in the market has been attributed to a “hard fork” - where a cryptocurrency splits to form a new digital token - in bitcoin’s sister currency bitcoin cash, says Forbes.
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Bitcoin has lost around 80% of its value since peaking at around $20,000 (£15,725) last December.
However, Anthony Pompliano, founder of US-based virtual currency management firm Morgan Creek Digital Assets, told the Daily Express that reports of cryptocurrencies being on the verge of collapsing could not be “further from the truth”.
Pompliano cites the growing number of bitcoin transactions as evidence that the cryptocurrency is being adopted more widely. This may be a result of the decline in bitcoin’s transaction fee, which has fallen from $52 (£41) in December 2017 to just $0.60 (£0.47).
He is urging investors not be distracted by bitcoin’s values and to focus instead on improving the technology’s network to draw in more users.
“While the bitcoin price is important, it is not an important measurement of future value,” Pompliano continued. “The underlying fundamentals for the blockchain [the technology underpinning bitcoin] appear to be growing stronger despite the decline in the current price.”
The market as a whole is also coming under greater scrutiny from regulators, a move that may hinder current values but should bolster cryptocurrencies and trading in the future.
The crackdown has seen the US-based Securities Exchange Commission (SEC) begin handing out penalties to cryptocurrency founders who do not register their virtual coins, in a bid to prevent “abuses and outright fraud in the growing digital industry”, reports CNBC.
Boxer Floyd Mayweather and music producer DJ Khaled were fined by the SEC last week for promoting emerging cryptocurrencies without telling investors they were being paid to do so.
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