What is Causing Bitcoin to Plummet?
Published on March 28, 2018
Bitcoin keeps hitting new lows, and everyone is in a panic. The de facto leader of the cryptocurrency market has dropped to an astonishing new low of nearly $7000 – down from the all-time high of $19,000 we witnessed only a month ago. That’s a massive dip in an incredibly short amount of time, which once again highlights the volatility of cryptocurrencies in general.
While nobody knows for sure what exactly is causing Bitcoin to plummet in price, including esteemed industry experts, we can certainly speculate as to what triggered this new drastic downturn.
Back in January, a report out of India initially struck fear into the cryptocurrency market. In his annual speech to parliament, India’s finance minister, Arun Jaitley, stated the following:
This vague statement led to media establishments across the globe reporting of a potential ban on cryptocurrency trading in India. Reports included fears that India may deem Bitcoin and other cryptocurrencies as illegal—which may have been the starting point for the chaos we are in now.
Of course, it was only later understood that Mr. Jaitley was merely suggesting to regulate cryptocurrencies in order to prevent illegal trading rather than looking to ban cryptocurrencies altogether.
Moreover, Mr. Jaitley stated that India would look to use blockchain technology as part of their government. This helped in calming the storm a bit, but it is still unknown what types of regulations India may put in place.
Yes, there are much bigger driving forces in the cryptocurrency market than India. However, there is talk of new widespread regulations that may arrive . This is where the world’s most powerful countries’ heads of finance will meet and discuss potential changes, as well as the cryptocurrency market in general.
As many crypto-enthusiasts will know, South Korea is one of the biggest driving forces of the market. It is also a country where cryptocurrency is not recognized as a currency or a financial product and has little to no regulation – until now, that is. The fear that the South Korean government is to make sweeping regulations of the cryptocurrency market did not bode well with the community.
Since September of 2017, the South Korean government has been closely monitoring the cryptocurrency market and had planned to enforce several regulations in order , illegal trading, money laundering and so forth.
Initial concrete measures took effect on January 30th, much after Bitcoin’s price started to dwindle, which shows that the mere fear of said regulations was enough to contribute to the turmoil.
The first measure was to ban all foreigners from trading cryptocurrencies on the South Korean market. The ban was initially proposed only to include non-resident foreigners, but in its final form, it includes current foreign residents and non-residents as well as “Kyopo” residents, which are ethnic South Koreans who had lived the majority of their lives outside the country. Besides foreigners, the trading ban includes minors.
Kang Young-soo, who is in charge of South Korea’s FSC cryptocurrency response team, stated the following:
The second measure by the South Korean government includes a ban on all anonymous cryptocurrency trading on the domestic market. This means that all Bitcoin traders must use their real name in both their bank account and the account of the domestic exchange they wish to use.
The change that took effect on Jan. 30th forced a termination of all current cryptocurrency accounts established in domestic changes, forcing traders to create new ones while using the newly-implemented ID verification system, much akin to one you’d see in an online casino.
Moreover, domestic exchanges are now under obligation to share user transaction information.
These regulations force a much tighter grip on the South Korean cryptocurrency market. They are still a far cry from an outright ban, but the majority of traders still remain discouraged.
The cryptocurrency community is huge, as evident all across the Internet, so much so that Bitcoin enthusiasts have developed quite a bit of slang. FUD (Fear, Uncertainty, Doubt) is one of those terms that will initially baffle outsiders, one which is often used in dire times like these. The term itself is pretty self-explanatory, and when it comes to a volatile currency such as Bitcoin, FUD can have quite an effect on the industry– especially when it comes from the mouth of .
Think about it. Even one article from an authority website or figure could cause a few Bitcoin holders to panic sell. Imagine the entire Internet is spreading doomsday predictions—it can easily become a self-fulfilling prophecy. Following the news of India’s alleged ban on crypto and South Korea’s plan to regulate the market, it’s easy to see that this is exactly what has started happening.
As the currency starts to dwindle in value, people will continue to panic sell, which can only cause Bitcoin to further drop in prices. This, in turn, creates a snowball effect from people who had previously decided to wait out the storm. See, currency value is not merely a matter of facts, but a matter of opinions as well. If the general opinion is negative, it’s only natural that a decline occurs.
Some people will go as far to say that none of this is an accident or that it’s simply the natural course of things—that this massive dip in price is, in fact, a premeditated attack on Bitcoin and the crypto-market in general. Although these people would be quickly written off as conspiracy theorists, and probably rightfully so, we can never know for sure.
Whether you are an investor or merely a bystander, we can all agree that cryptocurrency is a marvelous phenomenon with an unpredictable future. Some believe that cryptocurrencies, led by Bitcoin, are the future, while others are anticipating their quick demise. Only time will tell the final outcome, but until then, hang with us as we keep you in the loop on all the latest news.