leadf
logo-loader
viewPayPal
(
NASDAQ:PYPL
)

Tales from the Crypto: Feed Bitcoin more money, not less, says Goldman exec

The investment baking giant's head of commodities has said the solution to the digital currency's price swings is to pump in more cash, not pull it out

PayPal - Tales from the Crypto: Feed Bitcoin more money, not less, says Goldman exec

The week so far in the crypto space has been something of a volatile one as the ongoing status of Bitcoin continues to dominate the headlines.

After grabbing attention recently after surging to fresh highs, alarm bells are likely to have gone off on a more than few trading screens on Monday suffered a sharp decline, tumbling to around US$30,000 from US$40,000 in a single day and wiping out pretty much all of its gains since the start of the month. 

TALES FROM THE CRYPTO: Bitcoin’s recent slide is more of a stumble than a tumble

While the price has recovered since then (Bitcoin is trading at around US$38,900 as of time of writing), the sudden drop may have some of the crypto market’s veterans worrying that Bitcoin could be in for a repeat of its price crash in late 2017, which saw the currency soar to a then-record high of over US$19,000 before plunging to less than half that less than two months later.

However, while many may be thinking now may be the time to take their profits and get out, an executive at Goldman Sachs has said institutional investors should instead shovel more money into the coin to prevent such swings in the future.

On Tuesday, the vampire squid’s head of commodities research Jeff Currie told CNBC that the Bitcoin market is “beginning to become more mature” and more cash was needed from institutions to prevent massive price swings in the future.

“The key to creating some type of stability in the market is to see an increase in the participation of institutional investors and right now they’re small”, Currie said, adding that institutional money only made up “roughly 1%” of the more than US$600bn currently invested in Bitcoin.

However, with major tech firms such as PayPal Inc (NASDAQ:PYPL) offering customers the option to pay in Bitcoin and analysts at JP Morgan forecasting the price of the crypto could reach US$146,000 in the long-term, the floodgates for institutional cash may just be starting to open.

Less of that funny business, says Lagarde

Meanwhile, on the other side of the Atlantic Bitcoin is once again finding itself under pressure from regulators, with current European Central Bank (ECB) head and scarf enthusiast Christine Lagarde calling for global regulation of the cryptocurrency.

Speaking to the Reuters Next conference on Wednesday, Lagarde said the cryptocurrency has been involved in “some funny business” as well as “some interesting and totally reprehensible money laundering activity” and that any loopholes in regulation needed to be closed to prevent similar activity in the future.

The ECB boss went on to say Bitcoin as still a “highly speculative asset”, a view echoed this week by the UK’s Financial Conduct Authority (FCA), which warned crypto investors that they should be “prepared to lose all their money” if they parked it in digital assets.

But how can we regulate it?, says HM Treasury

Speaking of regulation, the UK Treasury has taken something of a different tack in its approach to the crypto industry, announcing a consultation on Tuesday to solicit opinions on the government’s regulatory approach to crypto and stablecoins, digital tokens that derive their value from other assets such as gold or fiat currency.

The consultation document said it is aiming to ensure any regulations are “equipped to harness the benefits of new technologies, supporting innovation and competition, while mitigating risks to consumers and stability”, perhaps a more conciliatory approach than Lagarde’s advice to stop all this funny business going on.

Echoing the FCA, the Treasury also said that the current situation of crypto assets falling outside of regulatory oversight “may prevent benefits from being realised and exposes consumers to potential harms and, depending on prevalence and value transferred, could pose financial stability and consumer risks”.

Responses to the consultation are accepted until March 21 this year, meaning the days of the crypto “Wild West”, at least in the UK, could be numbered.

PREVIOUS TALES FROM THE CRYPTO

 

Irish drug baron loses £46mln Bitcoin stash

Central banks join forces to assess potential for national digital currencies

Digital currencies could find a home in remittances market

China joins blockchain arms race, Libra under fire again

Quick facts: PayPal

Follow
NASDAQ:PYPL

Price: 278.11 USD

Market Cap: $326.79 billion

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Iofina says 'our business has been strong' reporting record revenue and...

Iofina PLC (AIM:IOF, OTC:IOFNF, FRA:IF7) (AIM:IOF, OTC:IOFNF, FRA:IF7) Tom Becker joins Proactive London to explain what drove their record revenue and profit in the first half.  Debt also fell in the first half of the year despite production outages caused by extreme weather and reduced...

19 hours, 30 minutes ago

4 min read