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?
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.
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.
Don’t get me wrong, Buffett is a very smart man. And a very smart investor. But he freely admits that he doesn’t invest where he doesn’t understand. And he freely admits he doesn’t understand bitcoin or cryptocurrencies.
You might know that there are various cryptocurrency exchanges all over the world. And depending on investors, prices can differ extremely. Investors in Singapore may value bitcoin higher, giving it a higher price than in the US. One place this has happened in is South Korea.
Computers don’t worry about rationale. They just do what they’re programmed to do, which eventually exacerbates the prevailing trends. But don’t forget, humans program the computers. Human nature is behind all market cycles. It’s just that this cycle is being helped along by the desire to make gains based on unemotional computer generated decisions.
In a recent interview with Fox Business, Dimon said, ‘The blockchain is real.’ He even says he regrets his previous comments. And that he now has ‘concerns’ about how governments will feel about bitcoin ‘when it gets really big’.