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. What has caused the drop?
Most asset classes have an element of risk. Crypto is one market that — at least for now — seems to carry more risk than any other. And that’s because there is no regulation. So what are some of the things to look out for that scream ‘scam’? I’m going to show you a couple, to help you look out and keep yourself safe.
What we are seeing today is a pullback in the price of cryptocurrencies. Largely coming on the back of what the South Korean government may or may not do. South Korea is the third largest country for crypto trading. One estimate suggests Korea accounts for a quarter of all global crypto transactions. Let’s put the importance of the Korean market in perspective.
If you understand the fractional banking system you'll also know that all the ‘cash’ in the world isn’t actually backed by real cash either. There’s so much more to it than just bitcoin and prices in fiat money. If you only take a superficial view, it’s easy to get misled into thinking it’s some kind of fake, ‘valueless’ mirage.
In my mind, hedge funds, on average, find it difficult to beat the market simply because they’re like most people. They give in to irrational behaviour, chase returns and aren’t able to sit still in a group of undervalued investments. So why not remove the human element from the equation?
The price at time of writing is US$11,098. In my view, the price is breaking down. The trend is still favourable, and you could argue that bitcoin is just correcting and consolidating its big recent move. In fact, if you’re financially and emotionally invested in it, I’m guessing that’s the story you’re telling yourself.
Cryptocurrency prices dropped by as much as 40% overnight. With plunges across the board hitting all the major tokens. With staunch crypto critics crying that the bubble is finally popping. But is it really?
Kraken, one of the biggest exchanges in the world, shut down late last week. The site was scheduled to go down for two hours for planned maintenance. However, things didn’t go to plan, and the site remained offline for two days.
South Korea isn’t the first nation to consider banning bitcoin, but it could be the most significant. A large portion of bitcoin’s global demand comes from the country. This isn’t the first time that a major government has threatened to ban it. It likely won’t be the last. Years from now, this may be looked back on as an incredible buying opportunity.
It was a future that we saw four years ago. And only recently have we started to reap the rewards. With cutting edge tech there’s no way to know exactly when things will take off. But with the right amount of insight and research, you can get in early enough to be ready for it.