What on earth is happening to Bitcoin?
The roller coaster continues – at the beginning of the year we had it trading just below $4,000, and then rising to highs of $12,000 mid-year and now dipping back to below $7,000 (which equates to a total loss of $20bn/£15.5bn in value).
So what has caused us to see some of the heaviest selling of Bitcoin in 2019?
The obvious culprit to blame for the trade uncertainty symptoms we are seeing is their fuelling by geopolitical and financial factors such as the recent regulatory tensions developing in China as the central bank authorities there undertake a crackdown on any cryptocurrency exchanges that are deemed unauthorised, i.e. illegal.
It would be remiss of me to forget that in the background of this crackdown, and as an interpretation of the words of President Xi Jinping when he talked of further embracing blockchain technology; there are rumours of a state-run digital coin appearing sometime in the near future.
Some financial observers have also cited a further possible impacting influence on this dip - that investors in the US market have been creating their own year-end tax-loss arbitrage and been selling hard in order to drive the market lower in order to record smaller gains on their holdings for 2019. Is that really a possibility? I must admit I’ve witnessed stranger market ‘manipulations’ invented for similar results in the past, so maybe it is a feasible consideration.
Above and beyond this there are of course the shrewd investors/speculators that have noted the risk/opportunity here and have jumped out early with a view to jumping back in back in at lower price.
But let’s not forget that it’s not just Bitcoin that is on a downturn right now as Ethereum and Ripple have incurred similar losses too.
Whilst many see this dip as a cause for concern there is, inevitably, a contrary opinion – an alternative spin if you will - with a few experts claiming that this is a “perfect time” to invest in these cryptocurrencies as by their very nature we should expect such volatility and inevitably their value will most likely rise again as before after such events.