Tuesday, July 14, 2020

Bitcoin crushing it or being crushed?

The Takeaway:

Bitcoin bulls have a penchant for seeing the potential in new developments, whether its the launch of Facebook's digital coin or US-China trade war. Astute traders consider both faces of the coin, and this article aids in this deliberation. Find out the possible bearish effects of Libra, Bitcoin futures, US-China trade war, and Indian crypto ban in the article below.

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Bitcoin’s journey is a notable roller-coaster in the crypto world. From attaining the highest price of almost $19,500 in 2017, to nose-diving in the pit with just $3,747 valuation in 2018, bitcoin did proffer a good amount of dilemma to its investors.

Bearish turn for Bitcoin

Designating 2018 as the worst-performing stretch for bitcoin, the Bitcoin price is pendulous again. The pricing still frames an oscillating picture. Rising from $5,455 and reaching around $11,000 in the past three months, the crypto coin seems to degrade again.

 

Do Authorities bear or fear Bitcoin?

The cryptocurrency sector, though established for a decade, struggles to find its way out of the regulatory woods. The severe suppressive actions by the Asian authorities towards crypto coins came as a nightmare to the market enthusiasts. Governments across the globe strive to monitor bitcoin and crackdowns by countries like China and India prove to be the barricades across its rise.

 

Bakkt might be a liability to Crypto

The manipulations assisting the evolution of the bitcoin futures contracts could be the drivers of the price crash. The price of the hottest coin soared in no time when the bitcoin futures went live on Cboe Global Markets and CME Group in 2017. However, as speculated, the prices plummeted soon after. Was it the institutions? Did they manipulate the costs to buy contracts at lower prices? The assumptions were that large institutional players aspired to crush the price first to acquire these contracts at a discount. The unfair play of artificially suppressing the prices benefits institutions in a manner where they attain bitcoins at a cheaper rate due to contracts signed at a rate dip.

 

Gold futures: A cautionary tale for Digital Gold?

Further, turning some old pages, we come across the gold futures contracts that emerged in 1974. In contrast, the initial reactions were not pretty. Gold surfaced a drop of almost 50% over two years, and the all-time high price was never observed in the next three and a half years.

Today, the announcement of Bakkt walks with a lot of hopes by its side. Bitcoin shot up by sharp $500 as soon as Bakkt’s launch was declared, but, is the surge sustainable? Or will the manipulative history repeat itself? Investors, beware!

 

Libra – A blessing or a curse?

Libra is the talk of the crypto world. With Facebook being the begetter of Libra, the crypto coin buzz would help masses to gain familiarity with the digital currencies. Nevertheless, this to-be-launched virtual coin can be a significant determinant of bitcoin’s fate. It can either turn out to be a boon or a bane for the red hot crypto coin. The spread of crypto knowledge can bring bitcoin into the mainstream and initiate a fake hype for bitcoin, setting the stage for a shortlived price surge. Also, Libra could sabotage decentralization, the cornerstone of bitcoin by coming into play as a centralized currency.

Moreover, the negative attention of US regulators towards Libra can end up as a scourge for Bitcoin and other digital coins.

 

Bystander Bitcoin: A casualty in the US-China trade war?

In recent months, the crisis between the two major powerful nations escalated the tide in bitcoin’s price through the decline in the Yuan. The more the rates of intrinsic money slumped, the greater rose the bitcoin’s value. But Trump, the contentious political leader, recently tweeted:

Talking with China? Did Trump hint at the reconciliation between the countries? Is the trade war ending? Will harmony increase the Yuan’s value and depreciate Bitcoin?

 

Will China slaughter crypto?

China is all geared up to execute its own crypto coin, but on the contrary, it strives to blackout the trading of all digital currencies with a prohibition on foreign exchanges. The People’s Bank of China released a statement stating that it would block access to every domestic and international crypto money exchange platforms and ICO websites.

Currently, the population of China can own bitcoin but not trade it. Approaching the launch of DC/EP, the most populous nation might eliminate the trading and mining activities of Bitcoin. Such regulatory actions can deteriorate bitcoin’s value.

 

Hashrate disruption

Sichuan, the mining capital of China, has suffered life and property damage due to the recent floods. 70% of the total bitcoin miners are concentrated in China, and heavy rainfall has hampered their functioning. Reception of this news was ridden with panic as Bitcoin’s performance was adversely affected by 2018 floods and it fell to its lowest price of $3,100. Reduced mining activity could slow down the network and depreciate BTC’s value, but the unnecessary panic can lead to a steeper decline.

 

Will India ascend Bitcoin crash?

Among the countries dropping curtains over the crypto coins comes India. The RBI (Reserve Bank of India) announced a ban on cryptocurrencies in the nation. However, the latest reports highlight the period of two weeks granted to the Bank to justify the ban.

If the ban is imposed, the bitcoin may suffer from a global loss. Though it may promote a temporary virtual hype, a potential decline can be expected to follow the ascend.

 

Fear and greed

The growth in bitcoin is unsustainable and functions as a catalyst for the downward movement in pricing. In 2017, people suffered from the bitcoin fever for no apparent reason but only because it was the “buzz” of the town. People went gaga over it. But, the heat whirled to be an unstable rise in the price of the coin, bursting the giant bubble.

The regulations are the foremost factors blocking the bright world for the crypto coins. The crypto market follows the most emotional behavior. Greed assists the rise in prices, and fear arises with the emergence of red light. At present, the fear is at its extremist.

 

Don’t fear, just Beware!

The article wants to highlight the flip side of the coin. Currently, most facets of the crypto industry are being seen through rose-colored glasses, where the red flags just look like flags. A conscious trader knows to access and include both the negatives and positives while making a decision.

Our advice to you is, to never fall for virtual hype or panic as they can make or break an asset.

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Disclaimer: The article reflects the opinions of the author and is not representative of Chaintimes’ views.
The article does not offer any investment advice. User discretion is advised when investing in or trading with cryptocurrency. Extensive and diligent research should be carried out by the reader before making a decision.

Paul Rea
Paul Rea
Paul is a graduate from the Queensland University of Technology and has a demonstrated history of working in the computer and network security industry. Apart from being a dedicated author, Paul also has an interest in graphic designing.

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