Photo: Coin Market Cap
Bitcoin is having a rocky time with a decline of 37.8% in its value in the past month; with some speculating that it is the market crashing. The price of bitcoin has hit a low of $8,738 as of 12:30 AM(GMT +5:00), February 2nd, marking the lowest bitcoin fall since late November 2017. Bitcoin recovered slightly by 2:00 AM (GMT +5:00), reaching $9,351.
What could have caused the downfall are major worries that India is now on a mission to ban cryptos and a possible price manipulation on a major exchange. The drop came after the comments from India's minster of finance Arun Jaitley who indicated that the cryptocurrencies are also used for illegal purposes; he indicated that India will not treat cryptocurrencies as legal tender and will try to stop their use in payments. The finance minister of India had last month cautioned investors against trading in cryptocurrencies as well, and likened such investments to "Ponzi schemes". This was not unexpected, considering how last month India sent notices to tens of thousands of cryptocurrency investors across the country after realizing virtual currencies are making $315 million worth of trade per month; the income tax department of India sent the notices to investors a week after it conducted the survey operations at major cryptocurrency exchanges on suspicion of alleged tax evasion.
Although the finance minister's words did not have any mention of legality of crypto in and of itself, commentaries by third parties and mainstream media journalists controversially claimed that a ban was imminent. The finance minister also added during the same conference:
“The government will explore use of blockchain technology proactively for ushering in the digital economy.”
Most of the 25 cryptocurrencies are seeing double-digit percentage fall over the past 48 hours as well. Market data shows that, in the past 30 days, the collective market has fallen from more than $800 billion to less than $500 billon.
But is it really the market crashing? Oliver von Landsberg-Sadie, the founder of cryptocurrency brokerage BitcoinBro speaking to bloomberg said:
"I think we are seeing growing pains ... You referred to regulatory sebacks but I think these are regulatory steps forward ... South Korea's stance on making sure that the exchanges know who they are dealing with is a very positive step."
Mr. von Landsberg-Sadie added that regulation and the recent correction in bitcoin's price was as a sign the market was "growing up". He also added:
"I think the regulatory environment is one of few factors contributing to this correction, which I see as a very healthy correction. It's a sign that the market is growing up and it's recognizing that cryptocurrencies are not a tool for money laundering or illicit use... I think it's a step in the right direction... I'm still very bullish the longterm view of cryptocurrency in general. I think they're the right kind of change we need to the money system but it needs to be done right."
Peter Guy , a financial writer and former international banker write in his article:
"The real test that bitcoin is undergoing isn’t the day-to-day price movements- the volatility of the coin mainly reflects the age of the coin, but trust and sustainability as it tries to shed its speculative reputation and shift to being a credible and reliable store of value and medium of transaction.
Do not underestimate the power of central banks to innovate their own crypto in order to maintain a centralised currency system. At issue is more than paper money becoming extinct in favour of a digital, cashless currency. It is part of a trend of de-dollarisation combined with inevitable, powerful technological change championed by a new generation.
Young people love risks because they can’t imagine the consequences. And old people love building golden tombs and sealing all of us in with them."
Cryptocurrency, in my opinion, is far away from having it's downfall, the growing market, and the people adapting to it and trying to understand it are the reason why we have been seeing a massive fluctuation in its day to day prices.
DISCLAIMER: This is NOT financial advice. I am just offering my opinions. I am not responsible for any investment decisions that you choose to make.
