The future, declared American baseball legend Yogi Berra, is not what it used to be. Cryptocurrency traders may be tempted to agree.
If 2018 was a turbulent time in the world of digital currencies, 2019 promises to be no less so. On the one hand, legal and regulatory pressures are closing in and rival offerings from the financial mainstream are being discussed.
Off their recent peaks
On the other hand, the blockchain technology that underpins cryptocurrencies is gaining ever-wider acceptance and many believe the cyber-money revolution, far from being over, has hardly started.
All this for investors to worry about even before they address such mundane matters as the performance of the cryptocurrencies in which they have invested. Here, the picture is mixed, to say the least.
Rival currency Ethereum peaked on 11 January 2018 at $1,221,69 and, similarly, began a long slide to about $224 towards the end of the year.
It was a similar story for Litecoin and Ripple, both down more than 80% on recent peaks.
So where are we going on cryptocurrencies and what should traders consider as they seek to answer this question?
Draconian law on passwords
Perhaps it would be advisable to separate the different factors likely to affect cryptocurrencies in the months ahead. As events crowd in, it is too easy to see them all as being connected, forming one undifferentiated “happening”, that may prove good or bad for cryptocurrencies and those who trade them.
In fact, they are quite separate and ought to be considered as such.
First, there are issues to do with law and regulation. These do not exclusively involve proposals for tighter supervision of cryptocurrencies, as we shall see. But in general, the trend has seemed to be in this direction, and those who trade and invest in cryptocurrencies are understandably nervous.
In the US, the Securities and Exchange Commission (SEC), the regulator of financial markets, has a 100% record of refusing to licence a Bitcoin exchange-traded fund (ETF). ETFs are investment vehicles that trade on markets in a similar way to company shares.
Volatility and the possibility of price manipulation to the detriment of investors were the reasons given for the SEC’s decision.
In the UK, MPs on the Treasury Committee have described cryptocurrencies as “Wild West” assets badly in need of regulation by the British regulator, the Financial Conduct Authority (FCA).