What led to the Burst of the Bitcoin Bubble of 2017?
The bitcoin bubble burst of 2017 was upbeat. It was the time before Christmas, 2017 when Bitcoin seemed unstoppable. Investors saw the digital currency boom and moved to Bitcoin hoping to gain maximum profit from its sudden popularity. But then, suddenly the storm came that burst the bubble of bitcoin that was developed until then.
In March of 2018, Bitcoin was crawling around $8,000 dollars. Bitcoin had encountered a drastic drop from $2800 to $1800 in less than 48 hours. Such a percentage drop literally is a price crash in any economy. These numbers clearly show the depreciation of Bitcoin’s worth. Rumors suggest that Bitcoin may even depreciate to a value of ‘Zero’ in a very short period of time.
The deviation in the Bitcoin’s price chart is the biggest valid proof of Bitcoin’s bubble burst of 2017. The below chart shows the variation of Bitcoin from April 29, 2013 to Nov 1, 2018:
The circle of digital currency seems to be reducing. Users are abandoning it and the cryptocurrency is only cycling from the sellers to the hands of the investors and people that hold them, although Bitcoin’s value touched historic heights in 2017.
As the dollar falls, investors usually respond to seek safety in terms of gold. Gold, as we all know, has been used as the most reliable currency for centuries, and its value is presumed, when the dollar is falling, as a finite resource. However, according to a survey conducted in 2017, analytics showed that most of the people choose bitcoin as their safest investment rather than gold.
The value of Bitcoin is currently running at six times its highest price since 2013. The sudden meteoric rise of Bitcoin’s value is certainly a bubble and has largely been compared with past ones such as the ‘Tulip mania of the 17th century’ and the ‘DotCom bubble in the late 90s’. Both the above examples reflect the painful collapse of a bubble and how the Bitcoin can be put to question.
Bitcoin alone itself is an everlasting discussion topic. So, without digging deeper into Bitcoin, let’s head over to the key reasons behind the Bitcoin bubble crash of 2017:
- Digital currencies are ditched by some Businesses that have a brand-name:
Almost all popular businesses are either giving up on the use of digital currencies or minimizing its use. A situation may occur if these businesses suddenly stop the use of digital currency which may lead to a bigger burst of the bitcoin bubble. Most businesses are now attempting to make their own digital currencies which can signify a big reason for the bitcoin crash. Many Australian Companies have turned their backs on bitcoin. Australian banks have announced the closing of 13 out of the country’s 17 bitcoin exchanges.
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- Blockchain technology has many competitors in the market:
The blockchain technology is implemented by a various number of industries working in the cryptocurrency space. The Bitcoin is not the only cryptocurrency. According to a recent survey, ‘Ethereum’ already has more than 150 organizations that believe its blockchain could be the next big thing.
- Regulations are hard on bitcoin:
Many different countries have a different view over the verification aspect of the bitcoin. The strict regulations are beneficial for the reputation of the digital currency since attackers now may be tracked through the extra security process. But this would gradually reduce the interest of investors in the use of digital currency.
Many big businesses have already removed their dependency on digital currencies and tried to implement the other aspects of blockchain technology since the end of 2017. This has largely impacted the burst of the bitcoin bubble of 2017.
- Major Bitfinex Cyberattack caused huge loss to Bitcoin Users:
Based in Hong Kong, Bitfinex is a cryptocurrency trading platform. In 2016, about $72 million in bitcoin were stolen due to a cyber attack on its trading platform. Investors and users suffered a major loss and did not get their refunds back. This attack drove away many of Bitcoin’s potential customers and investors. After the cyber attack, the Bitcoin’s value suffered one of its first major sudden dropdowns that was valued more than 10%.
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Is this the end of Bitcoin?
Well, the solution to this seems to be very unpredictable and this question is a difficult one to find an answer. We can not be so sure of which bubble will suddenly burst and then rise to unbelievable heights. Bitcoin bullishly rose to a value beyond imagination in 2017 but was suddenly grounded to a loss in 2018. Its value is even predicted to fall to ‘ZERO’ in the coming years according to a few experts.
If we go back to the year 2000, we can see how Silicon Valley was lost in the space of one single night. But Silicon Valley came back with a much stronger value and concept within a decade and is now one of the biggest startup incubators. Similarly, even after the crash, we can hope for the growth of Bitcoin in the coming years. At least for the current and future investors, there could be a flame of hope in the future.
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This article was written by our Guest Writer, Aakash Singh Rana.
