Umar Farooq, CEO of the bank's blockchain arm, Onyx, said in an interview with London-based media outlet Financial News that cryptocurrencies were still in their nascency. He compared the crypto growth trajectories and audio streaming.
Crypto evolvement: from the "Napster era" to the "Spotify era"
Farooq also recalled how peer-to-peer file-sharing service Napster was highly popular in the late 90s despite being "clunky."
It allowed users to connect directly to each other to share millions of songs for free. At that time, CD sales were at an all-time high with The Backstreet Boys and Britney Spears alone selling a combined 17.7 million copies in 1999. Back then, major music labels were either too complacent to see the emerging digital revolution or were unable to adapt quickly.
In February 2001, Napster reached an estimated 80 million users before it was forced to shut down after a court ruling on a copyright infringement lawsuit filed by Metallica.
BTC faces the same problems
Farooq has been at the helm of Onyx since October 2020. "Crypto is not going away," he said, However, it is hard to predict what changes it will go through in the "Spotify" era. "We are sitting in the Napster age. We just don't know what Spotify looks like. So, I think [crypto] is here to stay. I just don't know in what shape or form."
After piracy dealt the music industry a severe blow, Spotify appeared and completely changed the music market and the way people consumed it. As a result, it launched the era of streaming that was thriving over the past 10 years.
BTC becomes less volatile
Apart from the long-term prospects of bitcoin, analysts also point out that the volatility of BTC as well as altcoins has eased significantly.
Yet, uncertainty persists. BTC may again plunge below the $40,000 level. A high level of leveraged positions in the market now may trigger a new wave of sell-off with the shoulder and falling knife patterns. This is likely to occur if the price nosedives below the indicated level.
Some analysts believe that the BTC could stay above the level thanks to the break-even point of mining.
Miners are unlikely to dump BTC
History shows that the worst bitcoin dumps have occurred due to manners. Analysts note that if history repeats itself, traders should brace for a considerable correction of BTC. Some crypto analysts also assume that at the moment there is little chance that miners will dump bitcoin.
Charles Edwards, the CEO of Capriole, said that the break-even point for bitcoin miners is now at $34,000. "The worst dumps Bitcoin ever had were due to miners capitulation (December 2018, March 2020), when BTC fell below production costs, it is at risk for miner capitulation. BTC was at risk for miner capitulation at $30K in May. The current production cost is $34K, 20% below current price," he said. If BTC drops below this level, it may plummet to $29,000 per coin.
