Billionaire Bill Gates has declared cryptocurrencies have “no valuable output” as analysts predict more “destruction” in the market.
The price of major cryptocurrencies like bitcoin and ethereum have stabilised somewhat since last week’s crash.
The market has so-far managed to ride out a dramatic week in the stock market, which on Wednesday saw the worst one-day losses on Wall Street since June 2020.
But crypto owners — if they haven’t already sold up — remain in a precarious position. There has been no great recovery and prices still sit well down on last November’s highs.
Most analysts are predicting more pain ahead too.
It comes as Microsoft founder Bill Gates trashed crypto in the latest critical comments from the world’s wealthy elite.
After Warren Buffett described bitcoin as “worthless”, Gates explained why he doesn’t own any cryptocurrency.
“I like investing in things that have valuable output,” he said during an Ask Me Anything exchange on Reddit. “The value of companies is based on how they make great products. The value of crypto is just what some other person decides someone else will pay for it so not adding to society like other investments.”
Views like that won’t help the market, which remains in a “state of fear” according to Sam Kopelman, the UK manager of bitcoin and crypto exchange Luno.
Crypto tipped for correction of ‘over 90 per cent’
The largest concern is held for so-called altcoins – any cryptocurrency outside major players bitcoin and ethereum.
Respected crypto analyst Rekt Capital thinks smaller altcoins could shed more than 90 per cent of their value if the current fall in the market continues.
Blockchain.com CEO Peter Smith has made a similar prediction of impending “creative destruction”.
“We’re still in really the nascent period of building this whole finance system out,” Smith told CNBC.
“What’s going on in the market is a washout of risk and leverage across the entire global market system, and we’ve certainly felt that in crypto very keenly, especially in the past few weeks,” Smith added. “I’ve been saying for a long time this is going to be a long process of adoption and growth.”
Smith is predicting the weaker links in the crypto economy to be wiped out in the next few months.
Statistical analysts are also bearish.
Bloomberg was tracing a so-called “saucer top” formation on the bitcoin hourly price chart on Friday and FXStreet warned the world’s most popular crypto was at risk of staying below $30,000 USD for a “long time”.
“While buying the dip looked to be a sound plan a few weeks ago, it now looks to be fraught with insecurity,” FXStreet reported.
“As Bitcoin price recovers, a dead-cat-bounce is likely to unfold that will see price action lower.”