Digital Currency Updates: Could Bitcoin's Bear Market Be Nearing a Close?

Written by Alexandra Perry
Posted April 4, 2018 at 8:00PM

Last week things got rocky in the digital currency world, with the price of Bitcoin dipping below $7,000 and the price of Ethereum hitting a new low of $350. 

That said, these kinds of aggressive swings are not out of the normal for the digital currency market, which has been known to shed vast sums of value in a relatively short time. 

But a look at historical data reveals that Bitcoin and other digital assets could have hit the bottom.  

In this week's digital currency market update, we're going to cover analyst projections moving forward, digital currency mining arrests, and IBM's continued interest in the digital currency space. 

Let's get started. 

Has Bitcoin Hit Bottom? 

By the close of 2017, Bitcoin's price had ballooned more than 1,000%, skyrocketing from just under $1,000 a coin to over $19,000. 

That said, this peak didn't last for long. In a stomach-churning drop characteristic of the digital currency market, Bitcoin began to shed its value in December. By the closing days of March 2018, Bitcoin had lost two-thirds of its value. 

For new investors, this was a bit of a shock.

But it's really not anything new for the digital currency market or Bitcoin, which had similar sell-offs in 2011 and 2014. 

The good news is it looks like the end of the bloodshed is in sight. 

Fundstrat, a New York-based investment firm headed by Thomas Lee, issued a statement on March 28th stating that though a cryptocurrency bull market isn't necessarily underway, the pain could be “largely over.”

Lee also advised in the short term that investors should stick with larger market-cap cryptocurrencies. 

Forbes followed up on Fundstrat's report, stating: 

Fundstrat research shows that periods of cryptocurrency consolidation, or “purgation,” generally last 70 to 231 days. Bitcoin hit its all-time high in mid-December, almost 70 days ago as of March 26. Taking into consideration Fundstrat’s estimates, then, it’s possible the bear market could conclude sometime between now and early August.

With this in mind, investors seem to be eyeing getting back into the game. 

To read more about the close of our current digital currency bear market, click here

South Korea Arrests 14 Over Discount Bitcoin Mining 

South Korea has become increasingly active in the digital currency space over the last year, an activity that extends from digital currency buying to digital currency mining. 

On April 2nd, South Korean authorities stepped in and arrested 14 operators who were allegedly involved in illegally subsidized Bitcoin mining. The illegal mining has been going on since May 2017.

Over 13 companies were found to be complicit in the illegal mining. Over 350 machines were being used in the operations, and the bitcoins were being mined at an energy discount of 10%.

The arrests come in the wake of more global attention to Bitcoin mining, with global energy suppliers complaining that power has been used inappropriately by cryptocurrency miners. Lawmakers around the globe have stated that mining companies don't bring clear benefits despite their demand for cheaper power. 

It's still unclear whether or not the miners arrested in the sweep are going to face significant punishment or fines. 

The news was reported by the Yonhap News Agency. 

IBM Gets Serious About Crypto

In October 2017, IBM shocked the cryptocurrency world by announcing that it would be partnering with the Stellar network to improve the world of cross-border payments.

IBM revealed to CoinDesk on March 31st that it would be meeting with executives from multiple commodities trading platforms, large corporations, and even central banks to talk about how companies can use digital currencies like Bitcoin to save money and generate revenue.  

Jess Lund, IBM's new head of blockchain development, said, “We're seeing tons of demand for digital asset issuance across the board.”

Lund told CoinDesk that IBM was also interested in exploring other business opportunities for cryptocurrencies, stating, “What's happening is there's this emergence of a new segment that could actually be one of the biggest segments, that is a permissioned but public blockchain network typology.”

In the last year, multiple banks have started working to figure out the potential benefits of issuing their own fiat currency using blockchain technology. 

While Lund would not disclose the names of the banks IBM is working with, he said they compromise banks from the G20, which is an international forum whose members include China, Russia, the U.S., and the EU. Lund stated that the concentration of interest is coming from Asia and North America. 

Based on these conversations, he said he expects the first central banks to issue a fiat currency on a blockchain will be "the smaller ones" with a high concentration of interest in Asia and North America.

Lund expects to see decentralized cryptocurrency converge with central banks sometime soon. 

At this point, it's worth noting that IBM's work with digital assets extends past its work with banks. IBM is currently exploring a wide range of other tokens.

IBM is seeing three main kinds of tokens, including security tokens and utility tokens. To learn more about the difference between a security token and a utility token, see our utility and security token resource page.

Amber Baldet Leaves JP Morgan Blockchain Team

JP Morgan, which is just one of the hundreds of companies in the Enterprise Ethereum Alliance, saw its blockchain lead Amber Baldet leave to pursue her own venture.

Baldet was named one of CoinDesk's Most Influential in Blockchain in 2017. She has headed JP Morgan's Blockchain Center of Excellence since its inception in 2015. Baldet also has other experience in the blockchain space, overseeing partnerships with Zcash.

Baldet's position will be taken by Christine Moy, a senior product manager in the Blockchain Center of Excellence.

We will keep readers updated on IBM's digital currency interest in future updates.

Also keep an eye out for our Monday e-letter, which will include details from our time at Block 2 The Future, a blockchain conference in San Francisco. You won't want to miss this!

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