Bitcoin is Slowing Down.
The most popular cryptocurrency in the world is currently trading at about $10,000, according to bitcointicker.co - down from a peak of over than $12,000 on January 28th.
Its market Cap. is now around $190billion, which is much less than its December surge of almost $335billion.
Bitcoin’s run looked unstoppable in December, when it peaked from under $3,000 to almost $20,000 in less half a year.
However, the entire cryptocurrency market has been fluctuating towards the bottom of the charts since the beginning of 2018, with the other top coins Ripple and Ethereum also having a hard time.
Image source
The BTC price tracker above shows Bitcoin’s real-time value as of this writing.
Why is bitcoin tanking now?
Speculations of Tether Scam
This latest struggle for bitcoin was apparently triggered by rumors that Tether (a cryptocurrency pegged to the dollar) has been raising its value in artificial ways.
Bitfinex, the trading company owns Tether. Financial bloggers have long criticized the currency as they claim it has been created out of thin air just to increase the value of bitcoin.
A professor at UC Berkeley’s International Computer Science Institute namely Nicholas Weaver, has warned via a tweet that a “bloodbath” would inevitable explode if these claims are proven true.
He tweeted: “At current prices, net new bitcoin requires $18million of net new dollars flowing in to maintain the price. “Yet there is a net $100million a day of fake dollars in the form of Tethers...“If that tether printing press ever breaks, there will be a true bloodbath on the cryptocurrency prices. Good.”
Without this scam Bitcoin price would collapse by 80 percent - Nouriel Roubini, a professor at Stern School Source
Coincheck Hack
Another aggravating factor is the hack where $530million worth of NEM tokens were taken from Coincheck (a Tokyo-based crypto exchange) in one of the worst cyber-heists in cryptocurrency history. Coincheck has pledged to return about 90% of the lost funds, though they have yet to figure out when and how.
Impending regulation
Another important factor is many regulators are now taking action, trying to strike the right balance between not crushing the sector and allowing innovation to foster, and being able to track investments in the context of their local economies, and also trying to protect small investors when entering the space. One may not have the resources to rebound from a loss when purchasing coins/tokens in the online dark web so they might need help from authorities/regulators and so on. So, it's a really tricky balancing act for regulators. The thing is, the more news about regulation investors hear about, the more the coin tanks. After all, many people still believe in decentralization and the news!
Bitcoin, along with Ripple and Ethereum are in the sights of regulators worldwide, who must strike a tricky balance, according to Dr. Garrick Hileman. Dr. Hileman who has advised the CIA and US army on cryptocurrencies warned would-be cryptocurrency investors a regulatory crackdown is coming When Dr. Hileman, from the Cambridge University Centre for Alternative Finance, was asked if regulation as inevitable he replied: “I think it is.”
Source
South Korea Implements Regulations
It is now well-known that the Korean government is trying to get its hands around cryptocurrencies which were seen as ‘ungovernable’.
In a document published on Jan. 23, the regulator said it would only allow trade in cryptocurrencies from real-name bank accounts beginning Jan. 30. Those rules enabled banks to comply with their KYC AML (know your customer, anti-money laundering) obligations, the document said. The measures outlined were intended to "reduce room for cryptocurrency transactions to be exploited for illegal activities, such as crimes, money laundering and tax evasion," the FSC added in the document. Source
We used to feel that Bitcoin is decentralized and there’s no way to control it. The problem is, you have these centralized exchanges where people buy, sell and store (allow them to hold) their bitcoin or other digital currency on their behalf. Now, The Korean government doesn’t like anonymous people to buy and sell coins at these exchanges, mainly because they think there could be like money laundering and other illegal activity could be happening, so they want to prevent anonymous people from using the exchanges. That move may have been having a big effect on the market nowadays.
What Does The Future Hold (in my opinion)?
So far, it seems that cryptocurrencies still have a nice future, with governments unable to ‘kill’ the idea and starting to completely legalize or regulate them or even just warn people about them. Regulations don’t seem to be the biggest problem since bonafide traders still continue to believe in what cryptos can do and still use them. Internal problems (problems created within the crypto-space) like hacking, scams, etc. seem to be bigger threats that could derail progress if no governing body will serve to protect people against them. Technological limitations of Bitcoin must be surpassed in order for it to recuperate and regain its value.
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