Bitcoin is bouncing back after a sharp fall caused by possible regulations or even its ban in some countries, like China. After it fell below $6,000 USD, in recent days the cryptocurrency got close to the $11,000 mark, raising the market capitalization to almost $500 billion dollars.
Japan is responsible for almost 60 percent of the daily trading volume of Bitcoin, but just a few digital currencies managed to exceed their growth in the last few days, although most of them followed the path of recovery.
One of the reasons that allowed the recovery of the cryptoeconomy could have been the positive signal from the U.S. Senate regarding the regulation of cryptocurrencies. For now, the Exchanges should not be significantly affected, since the Commodity Futures Trading Commission was cautious by deciding to focus on fraud prevention, market manipulation and money laundering.
But despite the recovery of the market, the financial group Goldman Sachs believes that some digital assets will disappear from now on. According to Bloomberg, Steve Strongin, head of investment research at Goldman Sachs, believes that the market is at its peak of a speculative bubble, and only a few cryptocurrencies will survive: the ones that have a well-defined market niche and do not depend exclusively on parities with other cryptocurrencies. Strongin also said that most cryptocurrencies shouldn't have reached their most recent all-time highs.
The point of view of Strongin would mean the end of the speculative bubble created on the cryptocurrency market, as soon as investors start analyzing the digital assets individually, based on their merit, their technological structure and their credibility, and not collectively.
The same idea is shared by other financial institutions and specialists in the cryptocurrency market. The founder of Ethereum, Vitalik Buterin, is worried about the high expectations that investors have in the market. The promises of stratospheric results in the ICO's and the financial pyramids are some of the examples of the risks for the inexperienced investors.
What Buterin really wants, as well as the people who favor a regulation, and the trading experts, is to protect the investors from suffering masive losses. It's very important to understand that the investment market is speculative and involves risks, and it is essential that people learn about the industry before invest their money.
The most important rule for anyone who wants to venture into cryptoeconomics is not to mix their personal finances with those of their investments. Ideally, besides not falling for promises of exorbitant profits, you should never invest the money that you can't afford to lose, as well as keep a diversified investment portfolio, in order to minimize the risks.
By Thiago Barbosa