Falling from a record high at the end of December, the Bitcoin price crash continues. While many are optimistic that the cryptocurrency will bounce back, some experts believe it could hit a $0 valuation.
The Bitcoin price crash
It’s important to clarify that this prediction comes from Nouriel Roubini, who many have labeled as “Dr. Doom” due to his pessimistic economic outlooks, according to CNBC. While there’s no doubt that the Bitcoin price crash has been significant, the price could truly go either way, considering the volatility of the market.
Nouriel sent out a series of tweets over the last few days expressing his opinion that the Bitcoin price crash shows no sign of slowing down, stating:
“Bitcoin [is] crashing now to $6100. And the US Hearing on cryptoscams is only a day away. So a $5K handle looks likely unless the crypto-manipulation gangs starts [sic] pumping and dumping or washing trading again. So HODL nuts: be ready for a 75% loss from recent peaks.”
CNBC reports that HODL, or “hold on for dear life,” originated after a misspelling of “hold” in an online forum. It has since become a meme of sorts, with Nouriel using the term to express his expectation that the rapid downturn will continue and belief that investors should brace themselves for continued losses.
Nouriel’s pessimism regarding the Bitcoin price crash stems in part from an upcoming Congressional hearing where Christopher Giancarlo and Jay Clayton, of the Commodity Futures Trading Commission and the Securities and Exchange Commission, respectively, will testify about cryptocurrencies. After recent statements released by both commissions expressing concern about the volatility in their prices and the lack of regulation, it’s possible that the outcome of this hearing will only serve to further the Bitcoin price crash.
Although Nouriel and many investors are convinced that cryptocurrency is dying, there are other experts that are much more optimistic. For example, in an interview with Al Jazeera, Nithin Eapen, chief investment officer at Arcadia Crypto Ventures, suggested that Bitcoin is here to stay.
“This is nothing you see,” he said. “It has just fallen 20 percent this week, maybe in the two months, it has fallen 50 percent…I used to remember times when this was one dollar, then it goes to $10 and then it’s back to $3. Compared to that, this is nothing…This is like 1994 and the internet. By 1998 most of the analysts out there were saying ‘by 2002 there is not going to be any internet there and this hype is going to go away.”
Despite this optimism, cryptocurrencies have seen a massive sell-off over the last few days, with Bitcoin falling below $6000 on Tuesday for the first time since November. The Bitcoin price crash is not unique either, with the majority of virtual currencies also seeing their valuations decrease.
The uncertain future Of cryptocurrencies
While Nouriel is just one economist out of many, it seems as if a successful future for cryptocurrency is anything but guaranteed. Bitcoin value has varied drastically since its inception, and its current price still puts it far above where it was at this time last year. However, it’s the nearly $14000 loss over the course of a little over a month that has many investors concerned now.
The upcoming Congressional hearing on cryptocurrency is just the latest in an outpouring of hesitation from governments and other regulatory bodies around the world. While cryptocurrencies had a modest start, in the course of just a few years they’ve managed to turn the financial world on its head. With a total market cap in the hundreds of billions of dollars, the influence of cryptocurrency is too big to ignore.
Leaked documents from the Chinese government suggested that the country would soon be leveraging higher taxes on Bitcoin miners–a significant issue for mining corporations that call the company home due to low utility costs. This regulation, if put into effect, comes on the tail of the shutdown of Bitcoin exchanges and the banning of initial coin offerings within the country. Israel has also expressed its concern about cryptocurrency, discussing a potential ban of Bitcoin pending a review by its financial regulators. Add to this news the tighter regulations in South Korea and various rumors floating around the web, and it seems as if cryptocurrency investors are cautious and flighty.
While traditional stocks are generally tied to something concrete such as the performance of a company, the value of Bitcoin and digital currencies like it is largely subject to speculation. This Bitcoin price crash likely occurred for a number of reasons, but we’ve seen the market react drastically based on rumors and anticipation of regulation that may never come to be. In the past, we’ve seen the Bitcoin price bounce back in a major way, reaching the record heights we saw at the end of 2017. Even as governments start to treat cryptocurrency more like a traditional investment, Nouriel and others believe that this downturn may spell the end for Bitcoin and its brethren.
