2017’s meteoric, nearly across-the-board surge in cryptocurrency prices has seemingly come to an abrupt end. Goldman Sachs Group Inc.’s global head of investment research, Steve Strongin, has indicated that the recent market tumble, with losses to the tune of nearly $500 billion, stands to get much, much worse.
In a February 5, 2018 report, Strongin warned digital currency investors to prepare for massive future changes. While he did not outline a timeframe, Strongin cautioned that most digital currencies, which lack intrinsic value, will likely trade to zero before being replaced by a small group of competitors. Strongin’s research, citing the recent price swings as evidence, indicates a bubble inconsistent with a “few-winners-take-most” market.
Strongin believes that most modern digital coins have too many challenges to succeed – security issues, high maintenance costs, and slow transaction times that present significant obstacles to consistency and staying power.
While sobering, the report is not a death knell for cryptocurrency. Strongin alludes to parallels with the 1990s dotcom bubble – when it burst, it cleared detritus from the landscape, leaving survivors like Google and Amazon. Strongin remains bullish on the improvement of blockchain, and he envisions important practical applications, like improving financial ledgers, to become mainstream at some point down the road.
Strongin also asserts that “just because we are in a speculative bubble does not mean current prices can’t increase for a handful of survivors,” but he also cautioned: “At the same time, it probably does mean that most, if not all, will never see their recent peaks again.”
While investors may clamor to get back to the gangbusters returns of 2017 and the highs of December and January, it may not be realistic for some cryptocurrencies. If anything, the sharp correction should encourage investors to tread more carefully into the cryptocurrency arena.
If you’re looking for investment tools to help you navigate the cryptocurrency markets, Tickeron has developed Artificial Intelligence trained to find price patterns and trends in cryptocurrency. In early January, Tickeron’s AI predicted a significant decline for Bitcoin and Ethereum before the massive sell-off took place. Could more dire predictions be ahead? Subscribe to Tickeron’s A.I. to find out what the algorithms say.