- The value of Bitcoin drops to lowest level since November
- Increasing regulations coupled with cyber-attack on exchanges affect demand for cryptocurrencies.
Most observers termed the last year Bitcoin’s sudden rise as one of the biggest speculative manias in history. The gradual crash of Bitcoin in 2018 may help buttress the point that the cryptocurrency is taking its place in the bubble record books.
Bitcoin fell by 70% from its all-time high of late last year as it slid for a 4th straight day on Friday. It seems as if the cryptocurrency is simulating the 78% drop from peak of the Nasdaq Composite Index after the US dotcom bubble burst. A number of other Altcoins have also dropped toward zero – treading the path of Pets.com and other popular ICOs that were launched in the early 2000s.
Bitcoin has experienced similar losses before and had recovered from them. However, it’s unclear whether Bitcoin can repeat the act and recover from present plunge as most people already know about digital currencies and have concluded on whether or not to invest. Where institutional investors represent a majority of potential investors in digital currencies, the increasing regulations coupled with cyber-attack on exchanges affect the demand for cryptocurrencies.
In an interview on Thursday, the CEO of Blockchain Ltd, Peter Smith, stated that potential investors would like to see a positive market trend before investing in cryptocurrencies.
Bitcoin fell to about $5,790 on Friday, which is about 4.2% drop from initial price, this happens to be the lowest since last November. With Bitcoin currently trading at $5,845, this is about 59% drop in value this year alone. Other cryptocurrencies such as ETH, LTC also dropped in value, while the total market cap of all cryptocurrencies dropped to $236 billion from about $830 billion when cryptocurrencies were at their peak.
Though it is very difficult to ascertain the main cause of the drop in Bitcoin’s value, the cyber-attack on the 2 South Korean exchanges as well as the regulatory crackdown in Japan could have an impact
Regulators all over the world are tightening regulations on cryptocurrencies citing that cryptocurrencies are tools for illegal activities which include fraud, market manipulation, and money laundering.
Nobel laureate economist, Robert Shiller, stated that:
“[Bitcoin is] very much a bubble” though it may not approach zero.
He added that the sudden rise in the value of bitcoin late last year was “not a rational response.”
What is your opinion concerning the drop in value of most cryptocurrencies? Tell us in the comment box.