The new sensation ‘Bitcoin’ which peaked worldwide interest in 2017 when it rose by 1900% last year is experiencing what Analysts call a “correction” while skeptics call it the impending “bubble burst”.
History has shown that Bitcoin has experienced previous peaks before after which it drops by less than 50% only to regain the value and jump back up again. Many investors and experts have argued that the current loss of nearly 70% in value from its peak at $20,000 is not normal.
Jaison Matthison, a Financial Advisor from New York, says,
“We have to evaluate where we stand, Monday has been bad news for both the cryptocurrency market and the Wall Street, everyone is evaluating their losses”
Bitcoin is currently trading at $6300 at 08:39 UTC and managing to stand just above $6000. There have been multiple factors that have caused this dramatic sell-off, few of them listed below:
- On Jan 14: South Korean government plans to tackle cryptocurrency trading and spooked investors earlier this month. It resulted in the initial crash of Bitcoin from $17000.
- On Feb 01: India said that it does not accept Bitcoin as a legal tender in its union budget 2018-19. A lot major media houses misinterpreted the statement and outrightly published that Bitcoin is banned in India causing the price in India to go down to $4000 in a matter of minutes.
- On Feb 02: Bitcoin experienced another tumble and fell by 14% to $6,200 on Monday as major banks including Bank of America, J.P. Morgan, Citigroup, Capital One, Discover, and Lloyds said they plan to ban customers from using their credit cards to buy cryptocurrencies like Bitcoin.
- On Feb 04: China imposes a ban on the adverts about cryptocurrencies made the value to drop again.
- On Feb 05: China also stated that in order to ban its citizens from trading cryptocurrencies internationally, all international exchanges were also banned. With this news breaking out, Bitcoin lost almost $2000 worth of value in under 48 hours.
Today at 12:07 am CST lawmakers in the U.S. Senate questions top markets watchdogs over how to better regulate the highly volatile and risky emerging asset class. The sudden drop in Bitcoin yesterday coincided with the sell-off in U.S. stock markets, which dived to their lowest levels in 2018.
Miles Eakers, Chief Market Analyst at Centtrip, says,
“We envisage this decline will continue, setting the next technical level at $5,000 a coin”
Charles Matthew, a cryptocurrency investor from Copenhagen, says,
“We were expecting a price drop and a correction but this drop, I’m sure hurts a lot of investors especially ones that invested when it was at its peak”
Dheeraj Sharma, a Bitcoin miner from Uttar Pradesh, says,
“In a way, it’s a good thing that Bitcoin drops so much, all the weak hands will go away and only the strong ones will remain, which means stable hands, stable money and no crazy volatile swings”
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