Wow. It’s a rough time to be a Bitcoin investor. Bitcoin has crashed to a low of $9,500. You’re probably thinking – hey, that’s still good, and it is. But this drops marks the first time that it’s fallen below $10,000 since November. It also is half of it’s highest value of $19,000 which occurred on December 19. It’s been declining steadily over the last two weeks. It’s believed the reason for this has to do with the reports that South Korea is planning to ban the trading of cryptocurrency in its country. But what if you hedged your bets with Ethereum, Ripple or Dogecoin? Well, that didn’t help either as most of the virtual currencies have fallen since yesterday.
But what is happening? I mean, I’ve kind of been saying this for a while and I’m not an analyst. But it had to adjust itself eventually. Which is what analysts are saying. “The market was very overheated and had significantly dislocated from trend. A large percentage of investors were expecting this correction and reversion to it”, according to Charles Hayer of CryptoCompare. He added that a lot of what was happening was a fear of the market bursting, so people were selling their Bitcoin. And this is no different than any other market. Think about it for a moment. When we’re in a hot housing market, everyone wants to sell because they can make a ton of money. But eventually, that bubble bursts and you’re back down to “normal” housing prices.
Also, the fact that China’s central bank reportedly said that the government should ban the centralized trading of the currencies isn’t helping either. China is reportedly trying to push crypto-miners out of the country because of the energy that is used by the computers and it’s causing pollution. More importantly, though, China is worried that it could spawn an economic crisis. Which is what a lot of investors are experiencing right now. Some investors aren’t too concerned, saying that bitcoin went up way too fast, and is now returning to something of a mean. “All in all, this drop has brought us back to the prices that were traded about a month ago for most coins,” said eToro senior market analyst Mati Greenspan.
I’m not saying that $9,500 is a bad place to be. In fact, I’m saying it’s a great place to be. The issue was that it had increased in value so quickly, it was bound to come back down to these levels. It was just a matter of when. I think the interesting part about all of this is the fact that some of this change is due to certain banking systems banning its use. Or even thinking about banning its use. So if you live in South Korea for example – what are you going to do with all your Bitcoin? Understandably, not a lot because you can’t do anything with it in the country where you live. So in advance of that, you sell. And at a significantly higher rate. This does make me question what is going to happen with cryptocurrency in the future. Who will be the next to ban it?