Did Santa Bring a Bad Fortune for Bitcoin?
Happy new year to all the readers!
2017 has been a prosperous year for bitcoin as its value skyrocketed steeply throughout the year. However, the wild rise in the coin received a jolt in December. As the Christmas season ushers mirth and merriment for all, it came with a bad fortune for bitcoin traders; after touching the all-time high of $19,496 on Dec. 17, its value declined exponentially, reaching $11,590 on Dec. 22. Evidently, it was the worst week for bitcoin since 2013, resulting in an almost 40% drop from its peak price. Much to investors’ relief, bitcoin showed signs of recovery, with prices climbing gradually, touching $14,000 on Dec. 25.
Bitcoin Witnesses the Worst Week Since 2013
Bitcoin entered into one of the most devastating weeks in December. With the price sliding down to lower than $12,000, the news sent shock waves across the globe as many investors dumped their currencies. After the record-breaking rise to $20,000, the sudden fall in the price startled traders. This price drop caused a tremendous mess in the U.S. stock market, where the companies who joined hands with bitcoin and invested their funds in the coin received a massive setback.
Such a catastrophic downfall of the overall value of bitcoin has sparked debates over its future, with some traders associating the drop with a consequence of infrastructure related problems and others blaming it for the conflict it has generated in the crypto world. What’s more, the warning from cryptocurrency pioneer Roger Ver, who concluded that Bitcoin could witness “a mass exodus of people rushing for the door”, has caused a lot of turmoil in the market.
Don’t know whether to quit or “hold” through the chaos? Before making decisions in haste, read up about bitcoin’s forecasts for 2018.
On the onset of such confusion, many analysts fear the decline of nitcoin may lead to migration to other rival currencies. Does this decline signal good news for the rival currency? Overall, the rival cryptocurrencies also dropped, as the total value of the market steeped as low as $440 billion. However, these losses improved the prospects for the smaller coins, with many investors migrating there to mitigate the crisis. Today, bitcoin is looked upon as speculative, leading many traders to migrate to other coins like Ripple, Cardano, etc. So, the altcoins can greatly benefit from this crisis, as traders who enjoy cryptocurrency can switch to alternative assets to avoid cashing out of the crypto market.
Why Bitcoin Dropped So Low?
Bitcoin’s streep drop has also led to a decline in other cryptocurrencies. So, what is the reason behind the 20% drop in the global market? Take a cue from the following points that attempt to summarize top theories that have taken the internet by storm.
The Holiday Season
The end of the year marks some of the major holidays, from Christmas, Hanukkah, to New Year. So this festive season is a critical time for making investments. Most traders strive to withdraw their profits during this time. The cryptocurrency market is relatively new and volatile, so many traders make speculative investments. These speculative investors tend to cash out on early profit and do not “hold” through the turmoil. Since the close of the year is the ideal time for traders to translate their profits into cash, it is not such a favorable time for investments.
After the steady hike in bitcoin, altcoins like Cardano, Qtum, Ripple, and TRON have also witnessed substantial gains. The market value of these coins also affects bitcoin’s price. With traders leaving for altcoins and transferring funds from BTC, the market has become destabilized.
A number of crypto exchanges have collapsed this year. At the beginning of the month, the Securities and Exchange Commission (SEC) discontinued PlexCoin due to allegations of ICO scams. In addition to this, the Korean exchange called Youbit was hacked Dec. 20, losing a large percentage of its assets. These events have created a lot of confusion among traders.
Following the August fork, many bitcoin investors landed in trouble. With Coinbase supporting bitcoin cash, many traders switched their loyalty. Many amateur traders tend to mix up the two currencies, so the volatility of the BCH market may have planted wrong notions about BTC. If experts are to be believed, such a clash between BCH-BTC has caused the decline in the price.
The Bubble Popped
Many cryptocurrency skeptics trivialize bitcoin, calling it a bubble. The sudden drop in price has sparked a lot of noise in the market. Does this fall signal the bursting of the bitcoin bubble? Going by the opinions of the crypto critics, the popping of the bubble anticipates the end of bitcoin as we know it.
The Silver Lining
Following a steep decrease in price, the market is gradually climbing back. The steady rise in the price of bitcoin has prompted traders to seek the forecast for next year. Will bitcoin suffer from this fall or will it continue to surge? The current predicament has given rise to vehement debates. While many critics feel this decline signals the popping of the bitcoin bubble, cryptoanalysts believe it will rebound and rise steadily in the coming year, breaking all existing records. With a large section of traders branching out to bitcoin cash, critics feel the bitcoin price will fall further.
Chart Showing the Rise of Bitcoin
Two theories have become popular on the internet; while some predict it’s time for the bubble to burst, expert analysts state that there will be a possible hike in bitcoin’s value. In fact, bitcoin may even cross $30,000 by the middle of the next year if experts are to be believed. In the thick of all the confusion, there is a silver lining for bitcoin investors, as the figures are creeping back slowly following Christmas.
Featured image courtesy of Shutterstock.