Why Bitcoin Price Has Dropped to an All Time Low
The price of bitcoin has plummeted over the past week. Dropping to US$9,453 per token, an all-time low for the cryptocurrency since November 2017.
The biggest sell-off in three years.
For now, the market seems to be settling. It’s currently worth US$11,388, having risen 2.6% in the past 24 hours.
Gaining to some extent, but still a long way from its record high of US$19,343 in mid-December.
Keep in mind, bitcoin may have dropped 47% from a month ago, but it is up 1,010% from a year ago. As seen in the chart below:
The cryptocurrency market has lost more than US$250 billion since mid-January.
It’s no secret that the crypto market is extremely volatile. And if we look on the bright side, anything that rises as high and as fast as bitcoin did, must pull back.
But is this just a pullback?
First, let’s take a look at the reasons behind the market-wide crash.
Why did bitcoin price drop?
Everyone seems to be rushing for the exit, but why?
The most prominent theory is that cryptos are being heavily sold off due to fears of regulatory crackdowns.
CNBC reported that in a radio interview with South Korean Finance Minister, Kim Dong-Yeon, he confirmed that shutting down virtual currency exchanges was still an option.
The South Korean government followed up later by saying that a decision on how to move forward would be made after ‘sufficient consultation and coordination of opinion.’
Experts are suggesting that the drop hasn’t blindsided anyone. And that a correction was well overdue.
According to CNBC, Iqbal Gandham, U.K. managing director of eToro stated:
‘The market is correcting off the back of news that China is moving to crack down on cryptocurrency trading. Chinese investors are likely spooked having heard the news and the market is on edge as a result.
‘…But we don’t expect to see a major sell-off. Bitcoin in particular has gone through this cycle before … Moreover, it you look at the last three years, January is typically the low point for cryptocurrencies. So this dip is not wholly unexpected…’
The ABC reported that IG’s head of research, Chris Weston believes that the surge of bitcoin in 2017 was fuelled by FOMO (fear of missing out). And this is simply ‘part of the evolution of bitcoin’.
‘“They were watching other people getting really, really rich and they wanted a piece of it too and I think that’s ultimately where we are at the moment,” he said.
‘“You’ve even seen talk out there of people in certain parts of Asia actually remortgaging their house to get extra funds to buy more bitcoins.”
‘However, Mr Weston said the rush to get in is being mirrored by a panic to get out as the price of the cryptocurrencies tanks.
‘…We’ve seen the mass involvement. We’ve seen the hysteria stage. We’ve seen the hype stage, and now it’s come onto the regulators’ radars as part of this bigger picture.’
We’re still left pondering…is the bubble everyone’s speaking of about to burst? Or are we just shaking out the weak hands?
What to expect from bitcoin…
It’s a common belief that bitcoin is merely a bubble that could burst any minute. Leaving investors broke and sorry.
While others speculate that it could continue to rise to the $1 million mark.
No one really knows how this will play out in the long-term.
According to bitcoin experts, though, this crash was necessary. And will ultimately make bitcoin stronger.
But if you are thinking of getting in on the fun, only invest as much as you can afford to lose.
You’re told time after time, if you’re going to lose sleep over it, it’s not worth it.
This is a high-risk and high-reward market. You have seen first-hand how volatile the market can be.
If you’re interested in bitcoin, check out this FREE report ‘How to Buy Bitcoin’ by our crypto analyst Sam Volkering.
For Money Morning