Bitcoin Bounces More Than $1K in 24 Hours
The past week had seen Bitcoin’s price drop by double digits for the first time since the market corrected from last year’s lows.
Just last week on Wednesday the 10th at about 7:30 am EDT, Bitcoin was trading at an average of $13,000.
At the time of writing this post, most platforms that exchange Bitcoin and other coins registered significant drops across the market, with Bitcoin’s drop recorded at $10,104. Despite the fact that Bitcoin had been on the defensive for the better part of Saturday and Sunday, the price finally dropped to below $11,000 by Monday morning.
The market shake-up comes in the wake of sharp criticism from US President Donald Trump. According to him, the USD is the single most stable currency around the world and that it was gaining now more than ever. In fact, he went ahead to described the value of most cryptos including Facebook’s soon-to-be-launched Libra, as assets whose values are based on “thin air”. Take a look at some of his recent tweets in this regard:
The tweets drew mixed reaction, some believed that that would, in fact, boost the sector due to the head to state’s opinion on it; others predicted a negative impact on the digital assets following such sentiments.
But that was not the only reapproval of digital assets in the recent past.
Facebook’s Libra has also been in the spotlight for all the wrong reasons. According to various stakeholders including regulators and key investors, the coin is backed by individuals and companies that are well-invested in the financial sector including Mastercard and PayPal. This, in their opinion, goes against the whole purpose of having a currency that is not influenced by any organization or individual.
Some even argued that Libra was actually not qualified to be a cryptocurrency.
While Facebook’s announcement of Libra might have boosted the industry, one can’t help but wonder — could all these critics be responsible for the current situation being seen?
Views from industry top minds revealed a few things to write home about in relation to the current drop in the price of Bitcoin.
Why is Bitcoin’s Price Really Dropping?
It is largely believed that Bitcoin’s bottom is yet to arrive. The 2017 $20k price mark seemed like the ultimate disruption of the financial markets at the time.
However, in 2019 things are different. The market is even more volatile and to say Bitcoin’s price is unstable is an understatement.
The price of the crypto giant is known to swing wildly making and breaking investor fortunes in the process. But there’s always one caveat with cryptocurrencies:
There are no guarantees.
Earlier on in July, CNN reported that a large Bitcoin holder had placed a $200-million short order on Bitfinex, leading to a market crash. This came in the wake of a significant drop in the prices of gold, a haven for many investors.
Another factor perceived contributor to the current price drop is the failed talks between the US and China, making a number of investors in both states to dump liquid assets such as Bitcoin for conventional stocks.
Search engine results revealed that at the start of 2019, the interest in Bitcoin in the Chinese market had intensified as there were minimal uncertainties in the global economy. Some time back, one of the major global markets analyst Alex Kruger was quoted saying:
“There has been a lot of talk about how China is a major driver behind Bitcoin’s move up since the first week of May. So I decided to look into bitcoin Baidu trends (China’s Google). China’s bitcoin popularity has definitively been on the rise.”
Compared to today when the value of Bitcoin is fast-dropping alongside other altcoins, there are trading sanctions between the US and China which is believed to be a contributor to the ongoing woes in the crypto market. Tether, one of the widely traded coins has also been on a downward trend following a reduction in the trading volumes in the Chinese market.
However, as a precaution, note that:
The negative price shifts in the market may not necessarily be as a result of the ongoing trade dispute between China and the US. This is because the correction has widely been viewed as a technical rather than a fundamental movement. Other factors such as regulatory issues, market manipulation, and industry skepticism may also have come to play.
Many considered Bitcoin an alternative to other assets including precious metals and fiat currencies. As such, it can only be fair to acknowledge the fact that cryptocurrencies are also affected by the same microeconomic developments that affect those other conventional assets.
Other Coins Suffer Deeps
Being a market leader, the drop in the price of Bitcoin has negatively affected other coins in the market. Coins such as Ethereum, Dash, Ripple continue to experience sharp drops in market prices. A spot check revealed that Ripple, Bitcoin Cash, Ether, dropped by an almost similar margin of 5% against the USD.
Moving forward, investors can expect the market remain volatile in the short-term, but a turnaround is likely to occur if the ongoing sell-off eventually comes to a close.