Bitcoin hovered above the $8,000 mark Monday as its recovery from a tumultuous week continued.
It comes despite New York Fed Federal Reserve economists questioning in a research paper whether cryptocurrencies will ever become established means of exchange in the United States and other advanced economies.
Bitcoin had fallen below $7,000 Sunday morning, but rebounded above $8,000 later that day. The cryptocurrency was holding at $8,592.87, up 6.5% vs. the prior day according to Coindesk, not far from where it traded late Friday. Ethereum was 4.5% higher, while Bitcoin Cash had also increased 3.5%.
Bitcoin tumbled to a two-month low below $6,000 early Tuesday. However a Senate Banking Committee hearing on the potential dangers of investing in digital currencies was not as negative as feared, leading to a rally.
But its value is still far below the all-time high price of more than $19,500 in December.
Among Bitcoin-related stocks, Riot Blockchain (RIOT) jumped 6.8% on the stock market today, Long Blockchain (LBCC) rallied 3.9%, Overstock.com (OSTK) lost 4.3%, Marathon Patent Group (MARA) climbed 3.2%, and Bitcoin Investment Trust (GBTC) was up 1.7%.
IBD’S TAKE: Bitcoin lost more than half its value in just a few weeks, leaving many investors with big losses. Get ahead of the curve by watching IBD’s special online seminar Tuesday that will explain how to use cryptocurrency charts to buy right and lock in profits.
Meanwhile New York Federal Reserve economists Michael Lee and Antoine Martin have questioned in a recent research paper whether cryptocurrencies will ever take off in the developed world, arguing that they are a solution to a problem that doesn’t exist.
“Cryptocurrencies arguably solve the problem of making payments in a trustless environment, but it is not obvious that this is a problem that needs solving, at least in the United States and other advanced economies,” Martin said. “Fundamentally, we wonder whether a payment method designed to function where trust in institutions is completely absent can ever be as convenient as one where trust is required, but also already exists.”
In addition the anonymity afforded when transacting in digital currencies has made them a useful tool for illicit activities.
“Criminals, who typically use cash for the anonymity and security it provides, may be moving to cryptocurrencies,” Lee said. “The Drug Enforcement Administration reports a sharp decline in bulk cash smuggling in 2016, which is the traditional payment method for drug shipments and suggests that payments may have shifted toward cryptocurrencies.”
He also said digital currencies have proved to be more convenient for many illegal operations than operating with cash, and pointed out the value of Bitcoin plunged following a government crackdown on online black marketplace Silk Road back in 2013.
YOU MAY ALSO BE INTERESTED IN:
Why The Stock Market Sold Off, And What You Should Do Now
The Coming Cryptocurrency Lobbying War
Bitcoin And Cryptocurrency News And Trends
The End Of Money As We Know It?