Analyst who was behind a bearish bitcoin note now predicts a comeback

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Traders debate whether major firms will revive interest in bitcoin

Bitcoin fever could return to Wall Street.

The J.P. Morgan analyst behind a report that found major firms are losing interest in cryptocurrencies isn't ruling out renewed interest.

Nikolaos Panigirtzoglou wrote on December 15 that participation by financial institutions in bitcoin trading was fading. On Tuesday, he said on CNBC's "Futures Now " that the situation is likely temporary.

According to Panigirtzoglou, the firms should renew interest in crypocurrencies as stability grows.

"The stability that we are seeing right now in the cryptocurrency market is setting the stage for more participation by institutional investors in the future," he said. "The cryptocurrency market was a new market. It went through a bubble phase [and] the burst."

He expects the firms will begin re-entering the space as the importance of blockchain — the digital system that records cryptocurrency transactions — grows.

However, Panigirtzoglou contends it could be years away.

"The big obstacle is regulators right now," Panigirtzoglou said, adding that regulatory oversight is a "bit slow to realize."

During bitcoin's epic breakout year in 2017, it soared to $19,783.21. This week, it's been trading just under $3,500, an 83 percent plunge from its all-time high.

Correction: This story was revised to correct the percentage drop in bitcoin's price.

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Key Points
  • "I only have bitcoin," Jack Dorsey, the billionaire founder of tech firms Twitter and Square, said in a tweet Tuesday evening.
  • Dorsey participated in a social media game called "lightning torch," part of an effort to promote the so-called "Lightning Network."
  • "Lightning Network" is an update to the bitcoin network that would, in theory, make bitcoin transactions cheaper and faster.