Watch CBS News

Is bitcoin dead? Hardly. Will it rebound? Who knows

Crypto crash?
Cryptocurrency market sees sharp decline 04:37

Bitcoin may have climbed on Monday while major U.S. stock indexes were tumbling, but don't think the debate over the cryptocurrency is any closer to being resolved. After all, bitcoin prices -- whose stratospheric rise made some rich and confounded many professional money managers -- have plummeted to earth in recent weeks. However, that's not keeping the digital currency's proponents from swearing their side is winning.

The skeptics just point to the overall price plunge. After peaking near $20,000 in December, it has further slid from $11,520 on March 5 to around $6,986 on Monday afternoon, according to CoinDesk's Bitcoin Price Index. Rivals to bitcoin in the cryptocurrency market such as ethereum, ripple and bitcoin cash have also been crushed.

According to GMO co-founder Jeremy Grantham, who correctly predicted the market downturns in 2000 and 2007, bitcoin is a speculative bubble that's bursting. He recently told his clients in a letter that it "may well crash and burn even before the broad market peaks."

Echoing the views of investing luminaries like Warren Buffett, Vanguard founder Jack Bogle and JPMorgan (JPM) CEO Jamie Dimon, Grantham elaborated further. He declared bitcoin has "no clear fundamental value and largely unregulated markets, coupled with a storyline conducive to delusions of grandeur, makes this more than anything we can find in the history books the very essence of a bubble."


Of course, bitcoin's fans -- and they are legion -- see better times ahead in 2018.

"I talk to hedge funds, high net-worth individuals, even commodity speculators," Bill Barhydt, CEO of Abra, a cryptocurrency startup backed by American Express (AXP), told Business Insider. "They look at the volatility in the crypto markets and they see it as a huge opportunity. Once that happens, all hell will break loose."

Speaking to Bloomberg recently, LDJ Capital head David Drake declared that after a "long, cold winter," bitcoin prices would reach $30,000 by year-end. He invests in initial coin offerings (ICOs), a process for launching new digital currencies similar to initial public offerings for stocks, which regulators have argued is a haven for scammers. Google (GOOG) and Facebook (FB) have both decided not to accept ICO ads.

Twitter (TWTR) Chief Executive Jack Dorsey argues that bitcoin will become the single global currency of the internet within a decade. Square (SQ), the payments processing company that Dorsey also runs, said in November it would let U.S. users buy and sell bitcoin on its Cash app. Dorsey also is an investor in Lightening Labs, a startup that aims to make it easier to use bitcoin in transactions.

Whether bitcoin will regain the $20,000 level (never mind hit $30,000) or will dwindle to irrelevance remains unknowable -- but that won't stop the arguments from both sides any time soon. 

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.