The most recent Bitcoin price news has the cryptocurrency crashing around $12.5 billion from its price on Sunday. Cryptocurrency has been going down around the board, but what’s the reason for this most recent crypto crash?
The Bitcoin Crash
According to CoinMarketCap, Bitcoin is trading at less than $11300, which is a big drop from its price of more than $12000 just yesterday. With prices spiking to almost $20000 near the end of December, a lot of people lost a lot of money as more people poured money into the cryptocurrency. This recent Bitcoin price news is especially serious, as it reinforces the idea that Bitcoin’s value might not be stabilizing after all.
In the course of just a few months, the price of Bitcoin climbed from $3000 to almost $20000. While the current price of $11300 is still a massive increase over the value in the middle of last year, this Bitcoin price news shows that it’s possible for the value of the king of cryptocurrency to drop by almost 50% in less than a month. Bitcoin’s coin market capitalization is around $190 billion currently, which is still a big number but a far cry from the December peak of $335 billion.
Bitcoin isn’t the only cryptocurrency to crash, with competitors Ripple and Ethereum faltering as well. But while Ripple seems to be making a bit of a comeback, Bitcoin continues to plummet, leaving many cryptocurrency experts warning of an impending Bitcoin disaster.
The Bitcoin price news of another crash may have been triggered by rumors that the cryptocurrency Tether has been artificially inflating its value. Tether is a cryptocurrency owned by the trading company Bitfinex, and financial bloggers around the web have claimed that its sole purpose is to boost the price of the cryptocurrency king.
Express reports that Nicholas Weaver, a professor from UC Berkeley’s International Computer Science Institute, warned a “bloodbath” would ensue if the claims were true.
In a recent tweet, Weaver stated that “At current prices, net new bitcoin requires $18 million of net new dollars flowing in to maintain the price. Without this scam, Bitcoin price would collapse by 80 percent.”
Although $18 million is a tall order to fill, Tether moves a net $100 million a day, which would have catastrophic results far more severe than this most recent Bitcoin price news if it turned out the currency was a sham.
The Crypto Conundrum
Although this most recent Bitcoin price news is likely due to skepticism regarding the legitimacy of Tether, there are other factors that may affect the future of Bitcoin and of cryptocurrency as a whole. There was a significant decline after a leaked document from Chinese officials suggested that the country would soon be raising taxes on Bitcoin miners – a significant problem for the numerous cryptocurrency organizations that call the country home due to the very low costs of utilities. This comes after Bitcoin price news of a drop after China closed cryptocurrency exchanges and banned Initial Coin Offerings. Israel also made the Bitcoin price news after expressing hesitation towards embracing the currency, holding back on supporting it pending a review from financial regulators. Add to that South Korea’s recent regulations that prevent the trading of Bitcoin anonymously and put limits on who can trade, and it’s easy to see the effect that governments can have on Bitcoin price news.
While traditional stocks have a value largely influenced by the performance of corporations, Bitcoin doesn’t really have a real-world entity on which to base its value. As such, its value is incredibly volatile and changes rapidly based on supply and demand as well as rumors and news. One such piece of Bitcoin price news that could have effects on the price of cryptocurrencies as a whole is news that nefarious advertisers are including cryptocurrency mining ads on YouTube.
A spokesman for Google has recently come out and said that “[they] enforce [their] policies through a multi-layered detection system across our platforms which we update as new threats emerge. In this case, the ads were blocked in less than two hours and the malicious actors were quickly removed from our platforms.”
While Google’s quick action may have saved them from a PR disaster, the momentary blip of a few hours of negative news may add to the negative Bitcoin price news and continue the downward spiral.
Overall, when discussing the cryptocurrency crash, it’s likely due to an amalgamation of the various aspects of the Bitcoin price news. With no clear metric by which to measure the success of these currencies, the rumors and speculation cause the prices to run rampant, spiking and crashing with little possibility of prediction. While Bitcoin has a higher value than it did just a year ago, the increased scrutiny of traditional financial markets as well as new policies from governments may put a cap on how high this cryptocurrency can climb.
If Tether turns out to be as problematic as some expect, we may soon see some Bitcoin price news that is far worse than a 50% drop. It’s impossible to predict what will happen to the cryptocurrency scene moving forward, but the rising value may very well slow down if this onslaught of regulations and rumors continues to slow the growth. Whether this Bitcoin crash continues or the value bounces back remains to be seen, but it’s likely not a great time to risk any significant amount of money on this risky investment opportunity.