The cryptocurrency drought of 2018 isn’t over for Bitcoin. Following news that Goldman Sachs would not be creating its promising cryptocurrency exchange platform, Bitcoin succumbed to negative sentiment regarding institutional adoption.
In October of last year, investment bank Goldman Sachs reported it had a new cryptocurrency exchange in the works. At the time, digital currency exchanges were hardly anything new. But to have a public institution of Sachs’ stature seemed to promise a new standard of legitimacy for Bitcoin and its investors. Sachs continued to express interest in the Bitcoin cryptocurrency in 2018, but publicly abandoned progress this week.
More Bad News For Bitcoin
This follows the American Stock Exchange Commission’s denial of 9 Bitcoin ETF requests. The combined weight of these recent events has caused some to question what new regulations might be on the horizon for Bitcoin. The United States government has led a largely “hands-off” approach to crypto regulations thus far. Some worry that Goldman Sachs’ reticence to enter the space might be the result of insider knowledge regarding upcoming regulation.
The announcement that Erik Vorhee’s ShapeShift crypto exchange will soon require personal identifying information from users contributed to this narrative. Bitcoin and altcoins like Monero, ZCash, and Verge owe some of their reputation and staying power to their promise of privacy. Even while Bitcoin seeks institutional legitimacy, the market struggles to find its preferred balance between anonymity and institutional acceptance
Bitcoin Prices Smother the Altcoins
Bad news for Bitcoin means bad news for altcoins. Ethereum (ETH) lost 12% in the day following the announcement, and the rest of the market was almost uniformly in the red. News that a “Bitcoin Whale” had moved their $1 Billion in Bitcoin to cryptocurrency exchanges further depressed prices. Even though worldwide Bitcoin volume typically exceeds $6 Billion every day, the sale of $1 Billion all at once would likely have a negative price influence.
In the absence of new regulations, it is for now up to the Bitcoin community to continue proving this virtual currency’s worth. Very clearly, institutions and power structures are aware of and interested in Bitcoin and its associated cryptocurrencies. As global adoption continues to increase, despite price depression, global influencers may yet be convinced to join the party.
Bitcoin’s Path Forward
Discussions in the United States Congress and regulatory agencies are ongoing. On Friday September 7, EU finance ministers entered formal discussions about how to handle the burgeoning digital currency industry. It’s inevitable that such decisions will be made, perhaps even before the end of 2018. The question is: will new regulatory frameworks stimulate or stifle innovation and public adoption?
Further ETF entreaties are being made in the United States, and Coinbase Commerce has recently made it possible for potentially millions of online vendors to accept crypto money. Bitcoin is more widely used and traded than ever. With real-world progress like this, it’s only a matter of time before Bitcoin catches a break.