After breaking above the $5,800 mark earlier this week, bitcoin suffered its biggest one-day decline of the month on Wednesday (October 18).
After digital currency giant bitcoin reached its high of $5,844.18 on Sunday (October 15), the cryptocurrency has suffered its biggest loss in the month of October as it dipped below the $5,300 mark.
The digital currency dropped to as low as $5,109 on Wednesday (October 18) following a primer prepared by the Commodity Futures Trading Commission released on Tuesday (October 17).
The report alleges that digital tokens–which are used in initial coin offerings–are securities under federal laws, but also pose risks.
“There is no inconsistency between the SEC’s analysis and the CFTC’s determination that virtual currencies are commodities and that virtual tokens may be commodities or derivatives contracts depending on the particular facts and circumstances,” the report read.
The CFTC report continued, stating that while digital currencies have “potential benefits,” they don’t come without risks, which they state as: operational risks, cybersecurity risks, speculative risks, and fraud and manipulation risks.
“Virtual currencies are relatively unproven and may not perform as expected,” the primer reads.
That being said, while Goldman Sachs(NYSE:GS) analysts favor precious metals like gold over bitcoin, they have recently recognized bitcoin and other cryptocurrencies as a new asset class.
“Precious metals remain a relevant asset class in modern portfolios, despite their lack of yield,” analysts Jeffrey Currie and Michael Hinds wrote in a statement released by Bloomberg. “They are neither a historic accident or a relic.” The note continued continued, touching base on the fact that gold is still relevant even with the emergence of cryptocurrencies.
While the investment bank still clearly favors traditional safe-haven assets, its acknowledgement of the rise in popularity of digital currencies–and as a new asset class–is still a positive for cryptocurrencies.
Phillipe Ghanem, CEO of ADS Securities said in a CNBC interview that digital currencies are more than “just a new asset class.”
“[ADS] strongly believes that bitcoin will be the future,” Ghanem said, adding that the bigger discussion as it relates to regulations around the world is blockchain, which bitcoin cannot be without, and vice versa.
As of 6:27 p.m. EST on Wednesday, bitcoin had regained some some of its lost ground, rising back up to $5,520.90 per token. Year-to-date, bitcoin price has increased by 453 percent.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.