Bitcoin’s drop by roughly more than half, from its all-time high of near $20K, namely $19,870.62 in December 2017, to the current point where it continues to languish below $10,000, is genuine cause for worry, one that even blind enthusiasts cannot ignore.
It was after all, only a little more than a year ago when Bitcoin was less than $1k, so it cannot be far-fetched to argue that it could return to the same sometime this year.
And there are several indicators not guaranteeing it will drop to below $1k, for one can never really be sure where technological innovations are involved, but at least pointing to the significant likelihood it just might yet again drop that low.
- Regulations are daily increasing, and these signify Bitcoin and Crypt currencies biggest challenge thus far. Multiple countries are implementing a number of regulations to try and limit Bitcoin and crypto currencies in general.
Following a statement released December last yearr by SEC of its interest in Crypto currencies,
only early last week, Wednesday 7th March 2018, the US Securities and Exchange Commission (SEC) announced in another statement, plans to have all online platforms that trade in digital assets, including crypto currencies, register with the agency. The result was that Bitcoin’s value immediately dropped by a whopping 10% to below $10k after
A classic indication of how much and by how far, regulations will likely impact either negatively or positively, the prices of crypto currencies was the recent example when South Korea’s Ministry of Justice prematurely issued a statement banning crypto currency trading. Only hours after correcting the announcement canceling its earlier proclamation, the price of EOS, South Korea’s most popular crypto currency increased by as much as 40%.
Already several countries have, or are in the process of implementing regulations. South Korea, China, japan and a host of other countries have already put stringent measures to regulate crypto currencies.
In China for example, Initial Coin Offering (ICO’s) , including trading Exchanges, are banned, in addition to limits on mining of Bitcoin.
Overall, I much fear if these regulations prove too burdensome, the impact will be negative on the use and consequently the price of crypto currencies, and Bitcoin value could tumble as low as it was early last year, namely below $1,000. - Initial Coin Offerings (ICOs)
The rapid rise in Bitcoin price last year also encouraged and led to hundreds of Initial Coin Offerings (ICO’s). The problem however is that with the rise in ICO’s has also been widened the scope for crypto currency scam. In the US for example, the SEC has previously warned of ICO fraud and CNN even once described some potential ones. Should ICO fraud become too rampant, investor demand for Bitcoin and Crypto currencies in general will get hurt. - Hacking/theft of Crypto currencies
Recently the reported hacking of Binance, of the largest crypto currency exchange based in Hong Kong, and in which Millions of dollars were lost added to the many hacks that have plagued crypto currency in recent years. It follows the February 2014 hacking of Mt. Gox, a Japanese based Bitcoin exchange which saw the loss of 850,000 Bitcoins, at the time valued at $450 million. And not only that, in late 2017, around December, Youbit another Crypto currency Exchange based in South Korea was hacked and almost 4,000 Bitcoins worth averagely $28 million were stolen.
Such thefts/hacking remove trust and discourage potential investors from investing in Bitcoin or other crypto currencies. - Criminal gangs and rogue individuals and groups
The concern of most government worldwide is that Bitcoin and Crypto currencies could be used for money laundering and by criminal gangs and rogues, individual or State. Indeed, the speculation is that rogue and sanction hit Countries such as North Korea and Russia will, or are already using Bitcoin and crypto currencies in general to dodge circumvent.
This is because Bitcoin or Crypto currency users can at will, remain anonymous and moreover able to transact anywhere in the world. This freedom has no doubt led to increase in demand of Bitcoin and crypto currencies, as most people prefer anonymity I their financial dealings.
However, should governments find creative ways of regulating them owing to concerns there above raised, one can only conclude that the demand for Bitcoin will reduce. - Third party partners changing their minds
Only last week, Google, the world largest online advertising group followed an earlier decision by Facebook to ban all kinds of Crypto currency related advertising. Such a change in minds of third parties is bound to inflict significant damage on the value of Bitcoin. Indeed, last year when Facebook announced its ban, the value of Bitcoin dropped by as much as 12% and again early last week when Google followed sit, the value again dropped by 9%.
At every rate, these are powerful partners and their decisions to distance from crypto currencies, will without doubt have both short term and long term, direct and indirect impacts on the value of Bitcoin.