After trading in the red most of Monday morning, cryptocurrency prices popped higher midafternoon, pushing the price of the No. 1 digital currency, Bitcoin, to its highest level in a week.
After last Thursday’s regulatory news that Bitcoin and ether were not considered securities, which was widely considered a win for crypto enthusiasts, digital currencies had failed to hold on to gains, a sign the bear market is firmly intact. However, investors were hoping Monday’s move above the post-SEC-statement high will be the start of a more fruitful period for digital currency owners.
“There’s the Square news, which adds to the adoption argument,” said Matt Hougan, global head of research at Bitwise Asset Management. “But I suspect it’s a delayed response from the SEC’s comments last week. I think it’s a bigger deal that what people thought and maybe it took them a while to get their head around it.”
The Square news was the announcement that the New York State Department of Financial Services has granted the payment firm its BitLicense, meaning residents in New York can buy and sell Bitcoin in its Cash app. Square became the ninth company to receive a BitLicense.
The price of a single Bitcoin
last traded at $6,719.35, up 3.5%, since 5 p.m. Eastern time Sunday on the Kraken crypto exchange.
Read: Bitcoin and ether rally after SEC official says they aren’t securities
Could cryptos break the internet?
The slumping prices Sunday and early Monday came after a 24-page report from the Bank for International Settlements, or BIS, that said an underlying lack of trust will limit cryptocurrency adoption and added that the technology that underpins Bitcoin and other digital currencies could have far-reaching consequences.
“To process the number of digital retail transactions currently handled by selected national retail payment systems, even under optimistic assumptions, the size of the ledger would swell well beyond the storage capacity of a typical smartphone in a matter of days,” said the BIS, the Swiss-based institution often described as the central bank to the world’s central banks.
“But the issue goes well beyond storage capacity, and extends to processing capacity. The associated communication volumes could bring the internet to a halt, as millions of users exchanged files on the order of magnitude of a terabyte.”
In the past, the BIS has had a negative opinion of cryptocurrencies, which is why one analyst is taking the comments with a grain of salt. “The analysis used to support this hypothesis assumes exponential growth in usage and zero infrastructure growth,” said Mati Greenspan, senior market analyst at Etoro.
“It would be like saying in the ‘90’s that if all data were transferred over the internet, it would not be able to handle the traffic.”
Read: Here’s how much it costs to mine a single Bitcoin in your country
Altcoins erase early Monday losses
After stumbling out of the block, major altcoins, or coins alternative to Bitcoin, gained in afternoon trading.
popped back above $500, last trading at $516.41, up 3.6%. Bitcoin cash
was up 5.1% at $888.60; Litecoin