FINANCIAL coach, founder and chief executive officer (CEO) of Profit Jumpstarter, Keisha Bailey, is projecting that the popular cryptocurrency Bitcoin will claw back more of its recent losses as nations and institutions further adopt its use.

The value of Bitcoin peaked in March at US$59,000; however, it fell to less than US$30,000 in mid-June following news that China was clamping down on Bitcoin mining.

At the end of June, Bitcoin was valued around US$34,000.

Speaking on Taking Stock with Kalilah Reynolds, Bailey explained that China decided to target Bitcoin mining producers as part of wider efforts to regul ate the evolving market.

The cryptocurrency was originally created as a form of money that is outside of government control.

China has taken aim at the production areas of Bitcoin mining, which is responsible for tons of carbon emissions, saying it was in contradiction with their push towards clean energy.

“This is another case where China’s Government is saying cryptocurrency is out of our control and so we need to crack down on the production and mining and use of Bitcoin. The result of that has been volatility,” Bailey said.

As part of the crackdown, China’s Government instructed all the major banks to not provide any services related to Bitcoin. The situation also saw other cryptocurrencies being impacted across the world.

“China says they prefer to have control so they are pushing the use of their CBDC (Central Bank Digital Currency) instead of Bitcoin,” she added. 

El Salvador’s embrace

But while China continues to wrestle with blockchain technology, others are embracing it. El Salvador recently became the first nation to make Bitcoin legal tender. Citizens will not be forced to pay in Bitcoin, as the US dollar will also continue to be El Salvador’s currency of choice.

Bitcoin can now be used in any transaction in the Central American country and any business will have to accept payment in Bitcoin, with the exception of those that don’t have the technology to do so. The exchange rate between the two currencies will be established by the market, and all prices will be able to be expressed in Bitcoin.

In a recent op-ed article, emerging markets advisor Walter Molano posited that Bitcoin does not present a threat for El Salvador’s dollarised economy.

“El Salvador is a dollarised economy. It surrendered its right to print its currency two decades ago, therefore the Government is indifferent to whether another currency enters circulation. In fact it would probably welcome it, because the more transactions are done in Bitcoin, the more dollars are available for external obligations,” stated Molano.

Bailey said the price of Bitcoin stands to realise more gains with more similar adoptions.

“Because there’s a finite amount available, it becomes the classic definition of storage of value. And so the volatility in price exists, yes, but with each turn what I think we really need to be looking at with Bitcoin and cryptocurrency in general is the adoption,” she said.

“It’s coming back into play. I do see adoption picking up and I do believe that’s going to be the ultimate driver of the price of Bitcoin and cryptocurrency in general,” she added. 

Some still sceptical

However, equities trader at Jamaica Money Market Brokers Group, Clive Charlton believes there are still many things that need to happen before all cryptocurrencies, including Bitcoin, can be properly accepted.

He said while the cryptocurrency market has been exciting, its mysteries are yet to be unfolded.

Charlton added that governments continue to be cautious towards these currencies as they present uncertainties, especially to Third World economies that are trying desperately to drive growth.

“Government has a responsibility for stability, first and foremost, with billions still trying to be financially independent. Governments want to ensure that they can have some level of predictiveness in terms of what they’re doing to drive the economy, drive growth. It [cryptocurrency] is novel, and there is a strangeness to it,” reasoned Charlton.

The equities trader said while there will be more talk around alternative currencies, he believes more focus will instead be given to CBDCs which can be attached to domestic currencies and implemented under more controlled conditions.

Jamaica this year announced plans to join the growing list of places looking to use CBDC. A pilot should get underway this year. Finance Minister Dr Nigel Clarke told Kalilah Reynolds Media in a recent interview that the pilot has been delayed as the relevant legislation is not yet in place.