Regulatory Worries
Bitcoin and other cryptocurrencies have enjoyed a lot of freedom until recently. There are worries coming from the regulatory steps that China and South Korea are taking to get the cryptomarket under control. Government officials in South Korea have required that buyers use their real name to
buy Bitcoin.
There have also been talks in South Korea to
ban crypto outright. People in South Korea trade bitcoin at a 30 percent premium when compared other countries. In the United States, the Securities and Exchange Commission said it might start monitoring the cryptomarket more closely, after pressing charges on Plexcorps - which was accused of defrauding investors.
The German Central Bank says that bitcoin
needs global regulation in order to keep it under control.
Regulatory Worries
Bitcoin and other cryptocurrencies have enjoyed a lot of freedom until recently. There are worries coming from the regulatory steps that China and South Korea are taking to get the cryptomarket under control. Government officials in South Korea have required that buyers use their real name to
buy Bitcoin.
There have also been talks in South Korea to
ban crypto outright. People in South Korea trade bitcoin at a 30 percent premium when compared other countries. In the United States, the Securities and Exchange Commission said it might start monitoring the cryptomarket more closely, after pressing charges on Plexcorps - which was accused of defrauding investors.
The German Central Bank says that bitcoin
needs global regulation in order to keep it under control.
Photo credit | Jay Somodevilla | Getty Images
Bitcoin Futures
Bitcoin futures
began being traded on Dec. 10 by Cboe, the first contracts expired on Wednesday. Those first contracts for bitcoin futures were priced at $10,000. The theory is that investors
brought the price down to $10,000 by selling bitcoins, so they could collect on the bitcoin futures contract.
The problem with this theory is that the price of all cryptocurrencies not just Bitcoin fell. Another problem with the theory is that bitcoin futures don't trade at the
same volume as Bitcoin. Total trade for the Cboe contracts was about $1 billion since it launched, Bitcoin's daily market volume is $14.5 billion.
Photo credit | Scott Olson | Getty Images
Price Correction
Current growth rates by bitcoin and other cryptocurrencies were not sustainable. Bitcoin jumped over 200 percent from October to December. With so many investors jumping into the cryptomarket, this created a bubble.
Prices were rising high, Bitcoin was valued at $20,000 at its peak. Ethereum and Litecoin rode the wave, both jumped astronomically over the year. Ethereum rose 9,240 percent year over year, and Litecoin
rose more than 5,195 percent year over year.
When skyrocketing growth rates slow down, new investors panic. Long-time investors wait for the prices to adjust after growth rates come back down to earth.
Photo credit | Dan Kitwood | Getty Images
Business As Usual
Making the
rounds on social media among crypto investors is a chart showing that there has been a dip in the Bitcoin prices since 2015. Prices drop to a low before picking back up towards the end of the year.
This could be due to holiday spending, and investors taking out funds as tax preparation season begins. Whether it’s just a fluke or a trend that’s prevalent among Bitcoin investors. This is the fourth year of the crash, some are worried that investors didn’t see this coming even though this had happened in three previous years.
Photo credit | Scott Olson | Getty Images
Bitcoin Whales
Large holders of bitcoin are known as whales. 1,000 people
own 40 percent of the market, which strikes fear into investors because of the uneven amount of power that this small group of investors hold. The lack of regulation of bitcoin can make it possible for these investors to coordinate, drive the price up, and cash out when the price is at a peak.
Smaller investors could be at the whims of the larger investors. Regulations still haven’t been set-up globally to stop any of this from happening. Since Bitcoin has no value, it is valued at whatever people are willing to pay for it.
Photo credit | Craig Barritt | Getty Images
Cryptocurrency has not had a good month. Fortunes seemed to be on the rise until an unexpected crash occurred at the end of last year, taking the winds out of the sails of the cryptocurrency market.
Photo credit | Jack Guez | AFP | Getty Images
