We knew it was going to happen, but the Bitcoin mania looks to be coming to an end, judging by plummeting prices.
In December, Bitcoin hit an all time high of $19,783 and it looked like nothing could stop the cryptocurrency behemoth.
But thanks to a 46 per cent decline in the past month, we’ve seen a drop to below November prices of $7,836 at time of writing, The Independent reports.
It’s been estimated that a staggering $100 billion has been wiped off the crypto market in just 24 hours as a result of these plummeting prices, which has caused a chain reaction in the rest of the market.
A large majority of the cryptocurrency market is linked to confidence in Bitcoin, which is obviously waning. The altcoin market is not any source of solace for investors as Litecoin (once posited as a potential successor to Bitcoin) has dropped 55 per cent in the last month.
A lot of the volatility of the market recently stems from the uncertainty of the currency’s future in South Korea, with multiple reports of a crack-down on the way trading is carried out in the country.
Talks were even milling around of an outright ban on the trading of cryptocurrencies, though that has been ruled out by Kim Dong-yeon, South Korea’s finance minister, according to The Independent.
The South Korean government did, however, enforce a change in legislation from January 30 which meant only real-name bank accounts could be used in crypto trades.
This was intended to reduce the risk of criminal activity which has been associated with the crypto market, but it has also spread a lot of uncertainty in the market as a whole.
Most people in the crypto industry are confident the prices will settle and readjust to a higher price than currently listed on the markets, with some analysts even projecting massive increases in prices in bitcoin this year.
Imran Wasim, a financial analyst at AMSYS Group, told News BTC he predicted the currency’s more ‘mainstream’ appeal would contribute to a massive increase in price.
It has dropped in price, this is good. A lot more money is going to come into bitcoin, bitcoin will go up around $30,000-$35,000 this year – next couple of years? $100,000.
Oliver von Landsberg-Saide, founder of crypto brokers BitcoinBro, told Bloomberg these price fluctuations are merely ‘growing pains’ as the market stabilises.
I think we’re seeing growing pains. You referred to regulatory setbacks but I think these are regulatory steps forward.
South Korea’s stance on making sure that the exchanges know who they’re dealing with is a very positive step.
But it did have a hit on bitcoin…
I think the regulatory environment is one of a few factors contributing to this correction, which I see as a very healthy correction.