2017 ended on a positive note as Bitcoin reached its all-time high from 900 US dollars to whooping sum of $19,843 on December 17! It was indeed a bullish market for all crypto investors.
As the mighty Bitcoin draws back, it pulled other altcoins with it; a proof that whatever affects Bitcoin whether directly or indirectly will also affect the other alternative coins.
As everyone celebrates the incoming the New Year, exchanges begin to see red it came with a shocking blow as the value of Bitcoin drops.
“The cryptocurrency market has lost $340 billion of value since the start of January, with a severe sell-off on Tuesday and Wednesday” Business insider UK. According to Business Insider UK, Analysts are variously blaming: concerns about regulation, light trading volumes in Asia, Bitcoin futures, and an unsustainable price run-up.
Probable causes of the downtrend
Regulatory crackdown: this is one of the biggest plausible reasons for the downward trend. Reuters claims that China’s crack had a significant impact on this situation. Despite that, other factors contribute to the growing interest in bitcoins.
The Japanese government has officially recognized digital currencies as means of payment. Right next to the real money, bitcoins are now official means of payment in Japan.
According to CoinMarketCap, Japan and South Korea are home to several high traffic cryptocurrency exchanges.
“The sell-off comes amid concerns of fresh crackdowns on virtual currencies by the South Korean and Chinese government and as governments across the globe are struggling at how best to regulate bitcoin” Fiona Cincotta, an analyst with City Index
Asia is not the only ones mounting regulatory pressure on the crypto worlds; Russia is also indicating that it could constrain the activities of cryptocurrencies. During a press conference, Russian president Vladimir Putin said the legislative regulation would definitely be required in future for cryptocurrencies.
The Abnormal Spike in price: Bitcoin experienced a massive, sudden spike in November and December. According to Coindesk, Bitcoin reached a new high on Tuesday, December 12, 2017, when it peaked at a price of $17,531.48 (£13,176.31). It is the unusual spike that might have been the sudden drop in value; the crypto market may be experiencing a drastic correction.
Tears in Hodlers city
Bitcoin nosedived even a further mid-January to first few days of February Wednesday, losing more than half of its value from its peak price, with investors petrified fears regulators could constrain the volatile cryptocurrency that mooned last year.
As bitcoin experienced a downward trend, it seemed as if the hodlers were actually the foolish ones. Words in the streets claimed they were stupid for not calling it quite while they had the chance.
Although, some firm believers still believe it is not the end of Bitcoin. The Winklevoss twins have their faith in bitcoin unshaken; Cameron Winklevoss said to CNBC “We think regardless of the price moves in the last few weeks, it’s still a very under-appreciated asset.”
Those who can’t see Bitcoin’s potential are suffering from a failure of imaginable” Tyle Winklevoss added. The Winklevoss twins are not the only positive ones; the bestselling author of “Rich Dad Poor Dad” Robert Kiyosaki In an exclusive interview with Kitco News stated that Fiat money will lose its significance to precious metals and cryptocurrencies in the coming decades.
“Bitcoin will slowly erode fiat currencies’ relevance, while gold “has been there since eternity,” and will also be an important hedge instrument. I’m writing this new book called ‘Fake,’ contrary to the book title; the book is about what’s real.
“When I talk to people, I say, what do you think will be here in 2040? Will gold still be here? Well, it’s been here since eternity. Will the dollar be here? I don’t think so. Will blockchain be here, I think so. That’s really the way I look at the world of money and currencies is what’s going to be here in 22 years.” Robert Kiyosaki
He affirmed that the crash is unavoidable; “There are two kinds of bubbles, equity bubbles, and debt bubbles, and we’ve been in a debt bubble since 2004. When a debt bubble comes down, they come down in an avalanche.” Robert Kiyosaki
Nonetheless, the downtrends seem to have come to a standstill as bitcoin slowly appreciates in value. Currently, the price is still battling $7900 to $8500. Are the whales trying to influence the market? Is it the end of the bearish market? Or will there be more blood in the market? These are the questions that loom the mind of bitcoin hodlers, day traders and of course bitcoin skeptics.
Let’s hear your thoughts on the current situation of the crypto market; are you a firm believer that bitcoin is here to stay or it is just a bubble that will burst?