What does the sudden Bitcoin surge mean for cryptocurrency stocks?

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Recent Bitcoin news probably has you at least somewhat concerned about the value of your cryptocurrency investment. Bitcoin saw a huge drop in value recently, dropping below $6,000 for the first time since mid-November of last year.

Bitcoin surged above the $7,000 level as the cryptocurrency market stabilized, but, at its lowest point this week, the total cryptocurrency market saw over $550 billion wiped of its value.

If your financial interests are tied up in bitcoin right now, don’t panic.

Industry experts remain optimistic as cryptocurrency could go on a bull run greater than last year eventually passing the trillion-dollar mark.

How can they make such positive predictions in light of the recent bitcoin selloff, not to mention, tightening government regulation of cryptocurrency?

“Increasing regulatory recognition of cryptocurrency exchanges, the entrance of institutional capital and major technology developments will contribute to the market’s rebound and push cryptocurrency prices to all new highs this year,” explained Thomas Glucksmann, head of APAC business development at cryptocurrency exchange Gatecoin, to CNBC via e-mail this week.

“There is no reason why we couldn’t see Bitcoin pushing $50,000 by December,” noted Thomas Glucksmann.

The technology advancements referenced by Glucksmann include Bitcoin’s Lightning Network which is promised to boost the very slow transaction speeds experienced by those using the cryptocurrency.

The APAC head further elaborated how “one possible appetizer for the bulls, or the catalyst for the recovery, will be the release of another cryptocurrency backed instrument listed on a major exchange. There are several candidates in the pipeline, it’s only a matter of time until we have a cryptocurrency backed ETF (exchange-traded fund).”

In 2017, the CME and CBOE both released Bitcoin futures products which people could trade. 

Nasdaq CEO Adena Friedman even told CNBC in a recent interview that the exchange was “continuing to investigate” cryptocurrency futures.

However, there is still no bitcoin exchange-traded fund (ETF) on the market.

An ETF tracks the price of an asset and allows investors to trade bitcoin without having to buy the cryptocurrency on an exchange. Noted blockchain investors brothers, Cameron and Tyler Winklevoss, founded the Gemini Trust digital currency exchange and had their ETF application rejected last year.

The recent cryptocurrency sell-off was the result of huge price increases for a variety of cryptocurrency tokens last year.

Bitcoin was up nearly 1,300 percent, while Ethereum rose over 8,000 percent and Ripple surged over 32,000 percent. Some experts see the bullish trend continuing.

Jamie Burke, CEO at Outlier Ventures, a venture capital firm specializing in blockchain investments, told CNBC: “we believe after February the market will likely go on a bull run comparative if not greater than last year potentially reaching the trillion-dollar mark before a proper crypto winter sets in where the market becomes more focused on proper market fundamentals.”

Some experts argue Bitcoin and other cryptocurrency have no fundamental value while tech experts say digital tokens used to build new blockchain applications could increase in value as the industry develops.

Some companies like IOTA and NEO are trying to create blockchain platforms that developers can further develop. Known as utility tokens, these applications can be powered by IOTA, Ethereum, and NEO tokens. Mick Sherman, co-founder and CEO of Hercules Tech who specializes in blockchain and big data, explained why these types of cryptocurrency could see their prices appreciate the most in 2018.

“Utility tokens and assets with a working platform and a clear-cut reason for requiring both a blockchain and their own token, are more likely to appreciate in value this year. Some of these crypto-assets will not be used for years, meaning they have no utility value.”

The CEO added the caveat that many of the blockchain projects could be years away with more bubbles on the horizon in the meantime. “The revolutionary nature of blockchain technology is what’s driving the hype and even though we may be years away from viable blockchain-based assets, we may very well see several more bubbles,” he warned.

(To learn more about predictions in the future of Bitcoin, read Predictions from experts on how cryptocurrency will perform in 2018.)

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