The meteoric rise of bitcoin and the idea of cryptocurrency in general is unprecedented, and a couple of weeks ago the bitcoin price skyrocketed to almost $20000. The recent rise in value has caused many first-time investors to get involved with cryptocurrency, but recent warnings from China and Israel continue the steep bitcoin price drop.
The Rise and Fall Of Bitcoin
This recent bitcoin price drop doesn’t spell the end for the cryptocurrency, but it does serve to keep expectations in check regarding the reliability of the currency as a viable investment opportunity. While most traditional investments are tied to real-world metrics like a company’s performance, cryptocurrency price is simply a matter of supply and demand – and this recent bitcoin price drop indicates that the huge spike in interest wasn’t meant to last.
The fact that the bitcoin price almost reached $20000 per coin garnered the attention of many people around the world – including governmental bodies. After this recent bitcoin price drop, a lot of people lost a lot of money, and governmental agencies are stepping in to voice their displeasure regarding the idea of cryptocurrencies as a whole.
A Warning From China and Israel
Bloomberg reported on leaked documents from China that suggest that the country’s finance regulator may crack down on cryptocurrency mining. Additionally, the central Bank in Israel has also voiced concerns earlier today, stating that it won’t make the move to recognize bitcoin as a legitimate currency.
With nothing to tie the value of cryptocurrency to, the bitcoin price drop after this recent news was sharper than expected. Traditional investors and enterprising individuals alike recognize the volatility of the currency, and many people start to unload their stockpile after a notable bitcoin price drop, exacerbating the issue and causing the decline to accelerate faster than normal.
The crackdown from China is especially concerning, considering how big of a player the country is in the worldwide economy. Their issue is with the bitcoin mining itself, suggesting that powering computers specifically to dig up new coins is a waste of electricity – proposing restrictions on large mining groups that are located within the country. While the issue with mining itself might not spell the end for the currency in China, the fact remains that a number of large bitcoin farms are located in Asia due to their low electricity costs. Taxing and otherwise increasing the charges of these large organizations may have a notable effect on the continued health of the currency worldwide. A bitcoin price drop is to be expected following trepidation from such an influential government, but the crash is pretty significant considering how high the currency recently climbed.
This supposed crackdown is just the latest in a number of steps that China has taken to make the country less attractive to bitcoin mining groups. Recent shutdowns of cryptocurrency exchanges significantly impacted the country’s cryptocurrency scene, and the government is currently taking steps towards banning initial coin offerings (ICOs).
A recent report from Reuters also gives troubling news from Israel, with word that Deputy Governor Nadine Baudot-Trajtenberg stated to Israel’s parliamentary finance committee that bitcoin is not a real currency. This news comes alongside reports from Israeli cryptocurrency bank customers that are having difficulties purchasing bitcoin. Baudot-Trajtenberg explained the difficulties in regulating the currency because of the lack of real-world ties, and expressed that there may be difficulties accessing and trading the currencies until financial regulators issue banking guidelines. If the country is to continue to take steps to make it difficult to trade cryptocurrency within its borders, that’s not exactly an insignificant drop in bitcoin business.
While having a few countries that don’t allow access to bitcoin may not be a problem in and of itself, it sets a precedent that could lead to a bigger bitcoin price drop if more governments were to refuse to recognize the investment as a legitimate currency.
Bitcoin Price Drop
The bitcoin price drop today was notable, declining over 8% from its position at $17000 over the weekend. Before too long, the bitcoin price will be close to $15000 which is around a 25% drop from its recent high that had attracted thousands of new investors.
This recent news is concerning for the fledgling currency, and also has an impact on the trajectory of the myriad of less valuable cryptocurrencies that are struggling to find footing themselves. A bitcoin price drop is always concerning to investors, but the takeaway from this recent drop is the trepidation the currency finds itself in on the world stage. With the huge amount of money involved in the world of cryptocurrencies, it’s no longer to ignore the impact they have on the investment community. If other countries express their concerns, it’s definitely possible that this bitcoin price drop is just the beginning of an even bigger decline.