Bitcoin, Is That You? Cryptocurrencies Show Signs of Recovery After a Crash-Tastic Two Weeks
Bitcoin’s price is showing signs of recovery, following a dismal two weeks that wiped as much as 17% off the cryptocurrency’s value.
On Wednesday morning, the value of one Bitcoin was up 9% over the preceding 24 hours, reaching a value of $4,050 at the time of writing. As usual, other cryptocurrencies roughly tracked the change, with XRP up 7,7%, Ether up 10.1% and Bitcoin Cash up 5.3%.
That makes for Bitcoin’s biggest daily jump since July, but it’s worth noting that the cryptocurrency also popped following a weekend continuation of its slump that took it to a point that was 82% down from its high of almost $20,000 a year ago.
Cryptocurrencies such as Bitcoin are “mined” using powerful computers that race one another to win what are essentially number-guessing games, with each round being progressively harder than the last. This process is expensive in terms of both computing power and electricity usage—hence Bitcoin’s atrocious environmental impact—and so the virtual coin is now firmly in the zone where it may not be worth miners’ effort to continue creating it.
Earlier this year, various analysts estimated that the break-even point for miners was a Bitcoin value of somewhere north of $8,000. Before the most recent crash, the cryptocurrency was hovering around the mid-$6,000s mark for some time, so it’s been in the danger zone for a while now.
However, Mohamed El-Erian, Allianz’s chief economic adviser, said at a Tuesday conference that he believed cryptocurrencies were here to stay despite the current slump and the associated backing-away of retail investors.
“I think cryptocurrencies will exist, they will become more and more widespread, but they will be part of an ecosystem. They will not be dominant as some of the early adopters believed them to be,” El-Erian said, according to Reuters.