The crypto carnage has come to a halt for the time being, and everyone is busy assessing the damage done. The top digital currencies—Bitcoin, Ethereum, Ripple, and Litecoin—are showing an uptick after suffering severe damage over the last few days. Although it has brought some relief to see green on the screen, the question now is: Will cryptocurrencies recover to their previous highs? Will Bitcoin go back up together with the other top digital coins?
To answer these questions, let us first recap the main events that led to this bloodbath.
Last week, it was reported that South Korea planned to ban its domestic crypto exchanges in the wake of rising investor interest from all quarters. The government was concerned about the rising speculation in the cryptocurrency market and wanted to enforce stricter regulations. As we had written earlier, the entities flouting know-your-customer (KYC) and anti-money laundering (AML) rules were the targets of this campaign. However, there was no clear message conveyed and the resulting uncertainty led to the fall in the cryptomarket.
And earlier this week, Reuters reported about a senior Chinese central banker who stated that authorities should ban centralized trading of virtual currencies as well as businesses and individuals that provide related services. (Source: “PBOC official says China’s centralized virtual currency trade needs to end: source,” Reuters, January 16, 2018.)
When Will Cryptocurrencies Recover?
It is true that the government and regulators will not let cryptomarkets develop without any intervention from their side, and a bit of regulation may also be desirable in this market. As the news of fraudulent initial coin offerings (ICOs) and use of digital coins for money laundering keeps trickling in, it should become clear that this is just the beginning of the era of cryptocurrency regulations.
And hence, it can be concluded that such cryptomarket crashes shall keep on coming at regular intervals. But it is not possible to predict these crashes, nor is it possible to predict the recovery.
Now we come back to our original question—will cryptocurrencies recover? And the simplest answer to this is yes, they will. But this will be sustainable only if there are some critical real-world problems that they are solving. There can be no certainty regarding the time that it would happen, but it is most likely to happen if the crypto asset is fulfilling a need that is not being fulfilled by the existing system of currencies.
And BTC falls in this category. Bitcoin, aka “digital gold,” is most likely to come back to its previous highs, although it may take a long time to get there with all the negative news surrounding the cryptomarket at present.
Will Ethereum Go Back Up?
Ethereum, the second most valuable cryptocurrency, has been gaining attention due to the optimism surrounding its Ethereum network. Big businesses, as well as small ones, are excited about the possibilities that the Ethereum technology offers. The utility of Ethereum as a decentralized platform running smart contracts shall continue to increase and with a number of use-cases, Ethereum is most likely to come back to its previous highs sooner rather than later.
Will Ripple Recover?
Ripple XRP was one of the top cryptocurrencies heavily pounded by the recent cryptocrash, but it is also the one that has recovered handsomely. This is enough evidence that there are crypto enthusiasts out there who believe that Ripple XRP offers real value to financial banks and service providers, who are experimenting with the Ripple network and its promise of speedier and cheaper transactions.
Although there may be doubts regarding the actual utility of XRP to the Ripple network, if the company keeps on gaining clients willing to use XRP on its network, then it is most likely that Ripple will go back up to its recorded highs. We wrote about it here.
Will Litecoin Go Back Up?
Litecoin has been grabbing headlines since its founder Charlie Lee donated all his LTC holdings to avoid conflict of interest. It is one of the most promising cryptocurrencies that aims to fill a crucial gap in the Bitcoin ecosystem. Lee designed Litecoin to be the silver to Bitcoin’s digital gold, meaning that it would be more appropriate for smaller day-to-day transactions. Because it makes transactions that are not quite large and do not require a high level of security, which pushes up the costs, LTC would be the more desirable of the two cryptocurrencies.
Fed up of the allegations against him for selling his LTC at all-time highs, Lee recently tweeted that this was not the case.