By Jacqueline Corba
Bitcoin plummeted this week, falling below the $6,000 mark. The major cryptocurrencies are facing a steep decline in trading volume this summer, a far cry from the action in December when Bitcoin hit an all time high of $19,783.
Harbor Peak Senior Advisor Paul Johnson says #Fomo is gone, and institutional investors remain on the sidelines. These two factors, Johnson said, are driving the drop in demand.
"Until you solve the custody problem big institutions can't play," said Johnson. "Ultimately if it's going to be an exchange protocol of currency you have to have transactional demand."
Inconvertable paper money, known as fiat, is insured. But cryptocurrency is not, so if someone loses their Bitcoin there's no hope for recovery. That's the biggest hurdle keeping institutional investment away.
When Bitcoin fell below the $6,000 mark over the weekend, Ethereum also plummeted down to $434. Litecoin has traded below $100 for two straight weeks.
"When Bitcoin price goes down no one is buying the lesser stuff," derivatives trader Tone Vays said Thursday on Cheddar's show The CryptoCraze. "When Bitcoin goes up people feel richer so they are able to gamble more on these alternatives, and when Bitcoin goes down you have a lot less net worth so people are less likely to gamble."
Johnson agrees with the trend, but offers a different view.
"Almost all cryptos are priced to bitcoin because that's the most prevalent exchange medium, and not fiat," said Johnson. "So when Bitcoin goes down, almost everything else should go down almost by definition."
But, what goes down will eventually go back up, argues Vays who remains bullish on Bitcoin.
"I do see Bitcoin as being that one and only public Blockchain in the future," said Vays.
For the full segment, click here.