There are several questions related to what is responsible for the down trend of bitcoin for over a month. Since December 2017 , the bears had been in control of the market . Bitcoin has lost it value by about 57% . Bitcoin hit an all time high of $19,783 . However, the story had not been the same after the all time high price. Today, Bitcoin investors and cryptocurrency investors (the new ones in particular) are still to conclude if they took the right decision in their investment strategy. There are a good number of reasons associated with the bitcoin drop during this period which we are going to discover in this post.
Before getting into some of the reasons the cryptoafrica team came up with, i will remind investors and newbies that , the cryptocurrency industry is a revolutionary industry. The ”Big” organisations, financial institutions(including banks), governments, among others are not 100% for this innovation brought by Satoshi Nakamato (block chain technology). As an investor you need to play your role in making this technology successful by staying positive,avoiding FUD news among others because you know what the technology has for the world . Dont invest in cryptocurrency because of FOMO. Dont inevst what you cannot lose in cryptocurrencies. No body controls Bitcoin and as such the people have more say compared to the government which seem not to be the case at the moment.
I doing this post believe in block chain and cryptocurrencies because it can give the common man access to money,wealth and certain services . Block chain is the revolution, People just need to believe in it and get more education in it. At one point in time events and situations will always come in to cause a crash
SO, Why is the value of Bitcoin Falling?
1. Fear, uncertainty and doubt (FUD)
In every great innovation in the world, they will be some people against. The good thing is not everyone can be again and for. This is a normal situation in life.
As bitcoin and other cryptocurrencies are gain popularity, the haters are always there to spread the FUD . FUD in its simplest terms is a disinformation strategy used in sales, marketing, public relations, talk radio, politics, religious organizations, and propaganda.
The anti-crypto media will always be there to keep fear growing in the mind of investors.
Lately, the India regulation was reported as ”The Ban of cryptocurrency in India”. Some of these media had been talking of the fall in Bitcoin over the past 2 months and not how it has risen since it creation or in the last 12 months.
Some greedy investors are part of the FUD spread to make new investors to panic and sell so that they can buy at a cheaper price. This is why it is always recommended to get into bitcoin and cryptocurrencies with some enthusiasm. Those who get into bitcoin because they are afraid to miss the bitcoin train(Fear of Missing out or FOMO in short ) . will always sell in panic cause by such FUD.
A FUD when mentioning this year is the ” Korean Exchange Ban ” in which When media spread it that crypt0currencies exchanges were ban which were later denied by the government.
2. The Role of Government
Despite attempts by several governments to ban bitcoin, to no success the next thing is how it can be control.
Governments like that of India has rejected bitcoin as a payment method in India but does not still consider it illegal. This just confirms that Bitcoin can be considered as gold . People don’t accept gold for payment but it is valuable though.
The US and some countries in Europe are trying to implement tax on crypto traders, regulate the use of bitcoin and cryptocurrencies, control ICO among others. Such information is causing a lot of instability in the industry and fear among investors.
The position of many government on bitcoin,cryptocurrencies and the block chain technology is not known at the moment.
As these regulations are being made by the government, news often come up which is usually reported to make investors panic creating a bear market and thus making the price to keep going down. It is commonly said that ”After the rain comes the sun” Just be a wise investor ad never panic.
Standing against the government is quiet challenging but standing against the people is more challenging. This is what will determine the success of bitcoin and alt coins.
3. Bitcoin Futures Trading
Futures are an agreement to buy or sell an asset on a specific future date at a specific price. With Bitcoin futures investors place a bet on what the price of bitcoin will be in the future. Future trades don’t need to own Bitcoins to place their bet. CBOE launch the first Bitcoin Futures on the 10th of December followed by The Chicago Mercantile Exchange launch on December 17th.
Bitcoin future is very advantageous to the Bitcoin and can led to a spike in the price of Bitcoin. However i made some observations which are short term though.
Given that Bitcoin is unregulated, those who were skeptical about this are moving to trading Futures. They will be able to buy a future contract without owning bitcoin. Think of it if the ”Buy” was done on an exchange. This in my opinion contribute to the fall in Bitcoin price.
Also future trading can lead to price manipulation in the bitcoin markets in favor of investors.
You can Learn More About Bitcoin Features on Coin Telegraph
As bitcoin exchanges become more decentralized, the effect of future trading on the price of bitcoin will be bullish. Bitcoin future trading will lead to more awareness on bitcoin and cryptocurrency and hence more demand for bitcoin which in tend will make Bitcoin price to rise.
4. Too Many ICOs
The end of December was characterized with the growth in ICO. This has moved to 2018. In fact 2018 will be a year the highest number of ICOs will be launched. At the moment i am doing this post, More than 70 ICOs are on going.
With these many ICOs, people are moving Bitcoins to crypto platforms. This can make the price of bitcoin to fall as the companies launching these ICOs need money. This means that these companies are selling Bitcoin to get fiat to pay workers , buy development products,hosting among others. This invites more bears in the market pushing the price of bitcoin down.
Some ICOs are created to get money out of the pockets of innocent Investors. Given the fact the growth of bitcoin in the last 12 months, many greedy investors are getting in the market hoping to make 1000% gain over night. In doing so they buy a good quantity of bitcoin. In an attempt to diversify their portfolio, they engage in ICOs that will do way with their investment or ICOs that are not worth anything. Such angry investors can be seen in many crypto Investment Groups. At the end , the final resolution will be ”Out” increasing the number of people selling their Bitcoins. No Condition is permanent. They will be an uptrend in the market with proper regulations.
Will Bitcoin Continue Falling?
My Respond: NO
This is the question i get everyday from my students. Bitcoin was not created to fall. It was created to solve the problem of centralization. Decentralization is what majority of the people want . It is a moment where Bitcoin is going down. At the end of the year, your investment will be worth it.
Bitcoin since it creation in 2009 has experienced an increase of about 12,646,657 ( 12 million percent). In the past 12 months the percentage stands at about 792%. Do you think the story will be different this year? Again i say NO. This is the best moment to buy bitcoin. T
Since Bitcoin and cryptocurrencies are still in development, it is but normal that these challenges will come up. While others are working hard to make the block chain technology a success, some are there to make it fail while the last group are those who want to make profits from it at the expense of others. This is good that we are able to identify these at the moment. Below are two suggestions that i think if well implemented will make the crypto industry more stable and bigger.
i. Need for more decentralized exchanges to avoid market manipulation.
ii. ICO regulation( how this is to be done will be determine in the nearest furure)
What is your opinion about cyptocurrency market ?
As for me i am expecting bitcoin and other cryptocurrencies to the moon this year. This is not the first time bitcoin crashed. It might be the last time. ( Hope this answers the question of one of my student Raju in India)