By Amaan Afzal
Rabat – The largest of the notorious cryptocurrencies, Bitcoin, dropped to a value of $7,643 this morning – the first time it has fallen below the 8,000 marks since November of 2017, undoing the progress made that propelled the currency to a peak value of $19,511 on the 18th of December.
This dramatic decrease represents a 17% depreciation over the last day and a 46% fall for the month corresponding to a dismal start to the new year. However, these developments are not exclusive to Bitcoin with all major rival coins seeing failure this month – the most notable case being Litecoin with a 55% dive, raising speculation that the digital currency phenomenon is destined to bust.
The recent wave of Bitcoin and other cryptocurrency-hindering news certainly ensued these recent shortcomings. Worries of price manipulation and an astounding 500 million USD hack heist at Japanese exchange, Coincheck Inc, led to an investigation conducted by local authorities to ensure user security. Also, a number of regulatory threats were made by countries including the USA, China, India and South Korea including concerns of cryptocurrencies being used for dubious endeavours such as money laundering:
“The government does not recognize cryptocurrency as legal tender or coin,” said Indian Finance Minister, Arun Jaitley, on Wednesday, “and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system.”
Various critics have pinned blame on innate issues with cryptocurrency such as its natural volatility, manifesting in drastic price swings and postulating that Bitcoin will not acquire the government and user acceptance required to develop into a global payment system. In addition, numerous investors are distressed over suggestions that the widely used exchange, Bitfinex, has been artificially boosting digital currency values through its USD-backed digital tokens, ‘Tethers’, essentially disregarding the value jumps occurring through December.
“Bitcoin is in trouble,” said Lukman Otunuga, research analyst at a foreign exchange broker Forextime Ltd. “Price action suggests that bears are clearly in control, with further losses on the cards as jitters over regulation erode investor appetite further.”
Some experts remain unfazed by recent developments, given that regardless of Bitcoins rapid short-term failures, when its value is placed within a long-term context, the cryptocurrency still demonstrates a 2520% increase over the previous year.
“Even if we go as low as $5,000, it will still be double the prices that were traded in June and July of 2017,” said Mati Greenspan, senior market analyst at eToro, a social trading network.
The future variations in value of these cryptocurrencies are as of yet unknown, however this uncertainty could seal the eventuality predicted by J. P. Morgan’s Chief Executive Jamie Dimon (who described Bitcoin as a “fraud” and said that it would “blow up” in due course) by forcing a mass, fright-induced, investor sell-out.
“The jury is still out,” said CEO and co-founder of CryptoCompare, “and fear is gripping the markets with people preferring to step out and slight to safety rather than keep risk on.”