Bitcoin fell below $30,000 on Tuesday for the first time since January after a torrid week in which the cryptocurrency has lost nearly 30 percent of its value.
Over the past week, traders have been muttering about “death crosses,” hashrates and the Chinese province of Sichuan. But committed crypto enthusiasts told DealBook that the big picture is more promising than ever.
Bitcoin’s plunging price has set off a technical pattern called the death cross, in which the 50-day moving average drops below the 200-day average. Some chart watchers think this portends trouble — hence the ominous name.
In addition to falling prices, there is a marked drop in processing activity on the Bitcoin network. The hashrate, a measure of the computing power devoted to processing the cryptocurrency, has fallen sharply, which many believe is related to Chinese authorities’ cracking down on the huge computer farms that “mine” the currency in regions like Sichuan, where hydropower is plentiful. China’s central bank also said on Monday that it had summoned banks and fintech firms to remind them that crypto trading in the country is banned.
The more important long-term trend, however, is the gradual mainstream adoption of cryptocurrencies, said Matthew Sigel, the head of digital assets research at investment manager VanEck. For example, Goldman Sachs is now trading Bitcoin futures, and the bank recently published a 60-page report on the viability of digital assets.
But regulatory obstacles remain significant. VanEck’s application for a Bitcoin exchange-traded fund in the United States was delayed for a second time last week. (Mr. Sigel declined to comment on the application.) These vehicles, which already trade in Canada and parts of Europe, would greatly expand the scope of potential investors with exposure to crypto. Some regulators and industry insiders believe it is only a matter of time before they are allowed in the United States.
And beyond financial institutions, the government adoption of Bitcoin by El Salvador may finally prove that crypto is what its proponents have long proposed: a tool for democratizing finance. Although some Bitcoin enthusiasts are critical of the hastily adopted Salvadoran law making Bitcoin legal tender, Mr. Sigel said it gave the country’s mostly unbanked population a new choice and promoted technological innovation, just as other countries encourage green energy with subsidies.