It’s been another terrible 48 hours for cryptocurrency investors as the relentless selling over the course of 2018 appears to be accelerating.
Overnight the Bitcoin price broke another psychological barrier to the downside in falling through US$5,000 to trade for just US$4,977 at 14:00pm AEST on Tuesday.
The bitcoin price is now down around 75% over the course of 2018 and has lost 15% over the last 24 hours on top of 24% over the last 7 days according to financial wire Investing.com.
Unfortunately for cryptocurrency speculators that’s the good news as other leading cryptocurrencies have copped even more of a battering.
The Ripple and Ethereum prices are down 90% since peaking around Christmas 2017 at the height of the digital currency mania.
While Bitcoin Cash is the worst of the lot shedding 35% of its value in the last week alone to also be down around 90% over the past year. Bitcoin Cash’s price plunge has been blamed on disputes between rival cryptocurrency miners and cliques over a “fork” in the currency that will create a couple of derivatives of Bitcoin Cash, which is itself a Bitcoin spin-off.
So what’s going on with the Bitcoin Price?
Nobody knows for certain why Bitcoin has been falling throughout 2018 due to its opaque nature and lack of cash flows that could allow it to be valued on a conventional basis. However, there are many reasons commonly cited for its falls, including:
- Lack of regulation or the hoped for regulatory approval that could help bring it mainstream
- The regular ‘forking’ or splitting of cryptocurrencies into derivative currencies has led critics to claim they’re not infinite at all
- Regular scandals reported in the news about Bitcoin exchanges being hacked and funds being stolen
- Lack of institutional acceptance of the currencies, at the height of the mania it was believed the possibility of trading Bitcoin futures could help bring it mainstream, but this has not materialised
- Asset prices in general, such as capital markets including equity and property markets have also been falling over the last couple of months
- Banks, governments or large private enterprises have not moved to accept Bitcoin or other digital currencies
- Sentiment has done a U-turn, and as demand falls so do prices
- The Fear of Missing Out Trade (FOMO) has now turned into the Fear of Not Getting Out (FONGO) trade as many speculators sell at steep losses
It seems then that no one knows for certain which way Bitcoin’s price will head over the short or medium term, but it is certainly a high-risk bet that is likely to remain volatile.
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