Bitcoin and crypto prices have caused the winter horror of Ethereum, BNB, Solana, Cardano, XRP and new cryptos, a bit this week after a sharp sellout that wiped out over $1 trillion from the crypto market. It was stable.
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Bitcoin prices peaked at around $70,000 per bitcoin at the end of last year this month, even though some bullish investors are confident that Bitcoin prices will eventually reach staggering highs. Dropped to about $30,000 and rebounded slightly.
Now, Wall Street giant Goldman Sachs could hurt the story of Bitcoin, Ethereum and other coins diversifying their portfolios, as increased cryptocurrency adoption may not lead to higher prices. I warn you that there is.
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“Mainstream adoption can be a double-edged sword,” Goldman Sachs strategist wrote in a memo first reported this week. Bloomberg.. “It can raise the valuation, but it can increase its correlation with other financial market variables and reduce the diversification effect of holding an asset class.”
Bitcoin and cryptocurrency adoption surged last year, rising along with the prices of most major cryptocurrencies such as Ethereum, BNB, Solana, Cardano and XRP.
With Wall Street legends, financial giants, prominent companies, and even one country buying Bitcoin, Bitcoin prices are expected to continue to rise.
Meanwhile, the use of cryptographic techniques to recreate traditional financial services known as decentralized finance (DeFi), and as investors invest cash, both are collectible, built primarily on the Ethereum blockchain. The popularity of non-fungible tokens (NFTs) has skyrocketed.
However, Goldman’s rival JP Morgan has warned that Ethereum’s high transaction fees and network congestion could put NFT’s market share at risk to rival Solana’s blockchain. This can be an “Ethereum rating issue”. Bank of America states that Solana could be a “visa for the digital asset ecosystem.”
Elsewhere, led by Facebook’s newly branded parent company, Meta, the world’s largest tech companies, including Apple and Microsoft, are now entering the virtual reality-based Metaverse. We anticipate that Bitcoin, cryptocurrencies, DeFi and NFTs may play a role.
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The Metaverse could bring a “long-term tailwind” to some crypto assets, but it is “unaffected by macroeconomic power” such as the Federal Reserve raising interest rates and shrinking its huge balance sheet. Warned Goldman analysts.
“Over time, further development of blockchain technology, including applications in the Metaverse, can provide a long-term tailwind for the valuation of certain digital assets,” the strategist wrote. “But these assets will not be affected by macroeconomic power, including central bank monetary tightening,” he said.
The recent cryptocurrency crash has reduced the total value of the cryptocurrency market from about $3 trillion to just over $1.5 trillion, but was triggered by concerns that the FRB could raise rates soon. As investors face the reality of a return to pre-epidemic monetary policy, the global stock market is sinking.
Many long-term Bitcoin and crypto investors aren’t worried, but this month Cathie Wood’s Ark Invest predicts that Bitcoin prices could exceed $1 million by 2030. Ethereum has a potential market capitalization of over $20 trillion.