After falling in value to just over $5,500 last week, Bitcoin began to bounce back on Monday as investors returned to the venerable cryptocurrency.
However, competition between Bitcoin and its low-fee, high-speed offshoot, Bitcoin Cash, remains heated.
Before losing almost thirty per cent of its value, Bitcoin’s meteoric rally past $5,000, $6,000, and $7,000 in recent weeks prompted the vice president of Goldman Sachs’ securities division, Sheba Jafari, to predict a price consolidation at $8,000.
In a memo to investors, Jafari suggested that Bitcoin would stabilize at this price, before possibly climbing further.
Jafari’s prediction was scuppered on Wednesday however, as Bitcoin’s price plummeted. News that developers were abandoning plans to implement a fork – a software upgrade splitting the currency – sent markets into a tailspin.
The long-anticipated “Segwit2x” fork would have increased the capacity of the blocks transactions are processed in, allowing for faster transactions with lower fees. Many observers believe that these issues need to be dealt with if Bitcoin is ever to enter widespread day-to-day use.
Segwit’s cancellation saw traders pull money out of Bitcoin and into Bitcoin Cash (BCH), a Bitcoin clone which offers the larger block sizes and lower fees promised by Segwit.
Consequently, the price of BCH jumped to just under $2,000 on Sunday, up from just over $600 on Wednesday.
Merchants of doom
At time of writing, Bitcoin looks to be on track to climb in value again, and BCH’s price has already settled down to $1,250. Nevertheless, the price volatility of recent days has given ammunition to cryptoskeptics and Bitcoin naysayers.
Speaking on CNBC’s “Money Talks,” on Monday, commodities guru Dennis Gartman said that Bitcoin is “a market for criminals and millennials…there is no value here whatsoever.”
Gartman has remained harshly sceptical of the cryptocurrency, even through its unprecedented growth this year.
Gartman went on to slate the volatility of cryptocurrency. “How can you buy or sell a painting using bitcoin, when the change in volatility is 20-30-40 percent in the course of a week? It’s nonsense,” he said, adding: “I shall not trade it.”
Despite the fighting words, Bitcoin has historically returned stronger after every crash, and continues to draw the attention of major players in the world of finance.
These include billionaire hedge fund manager Mike Novogratz, who told a summit in New York that he bought between $15 and $20 million worth of Bitcoin over the weekend.
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