Bitcoin is now a little under $9,000 at the time of writing, which is a lot less than almost $20,000, the high reached in December 2017. The crypto currency market is closely watching what is happening and as always with such price fluctuations, people are divided.
Why is Bitcoin falling so hard today?
First off, this falling has been going on for weeks now. It is only now that people talk about it as they start to be scared. Many reasons can be mentioned as to why Bitcoin price is going down. Let’s mention the important ones:
Calls For Regulations In India And South Korea
The biggest recent drop appeared after a speech by Arun Jaitley, Minister of Finance in India. He said:
“The Government does not consider crypto currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.”
This is what scared many but Arun Jaitley also declared something really important:
“The Government will explore use of blockchain technology proactively for ushering in digital economy.”
Before the response of the Indian government we had another drop caused by the South Korean Government. At that point in time people thought that South Korea was going to ban crypto but in reality the suggestion was that the government is working on heavily regulating crypto currencies.
The key is here: heavily regulating. Bitcoin had a horrible 2018 start because of the fact that there are really strong calls for regulations implemented by governments from around the world. We need to acknowledge the fact that the anonymity behind Bitcoin and other crypto currencies automatically means that digital currencies can be used for many illegal transactions and money laundering. This is not the point of having new digital currencies in place.
Facebook Bans Crypto Currency Advertising
Facebook product management director, Rob Leathern, stated:
“We want people to continue to discover and learn about new products and services through Facebook ads without fear of scams or deception.”
I already hinted at something similar to the real problem here in this post. The same anonymity mentioned above allowed thousands of companies to be launched as fraudulent ICOs, crypto currencies, binary options, Ponzi schemes or just plain scams. The “weapon of choice” for promoting these fraudulent sites was social media.
It is completely normal for Facebook and even more large social media sites to heavily regulate the ads they have so that users are protected from being scammed. Now it is so easy to trick people on Facebook through the promise of getting millions through crypto deals and ads are a huge part of that.
The announcement itself caused the price of Bitcoin to go down and this is completely normal.
Coincheck is a really popular exchange that was recently targeted by hackers. As a result, NEM worth of 380 pounds were stolen. Such a hack can obviously affect all crypto currencies as it questions security. All users are recommended to keep investments as safe as possible by using cold wallets but only a small percentage uses this. Most crypto is held in online wallets so hacking is something that can happen.
We may very well see new hacks in the future so do be safe.
An Influx Of Inexperienced Investors
At the end of last year Bitcoin price went up a lot. This made many want to buy Bitcoin and it did happen. I even had a friend ask me about investing in BTC after he heard about the price increases on the radio. The problem with a large influx of new investors that are inexperienced in something like Bitcoin is that they will only be happy when the price goes up. If a problem appears and the value goes down, these people automatically want to sell Bitcoin and cut their losses.
Price problems quickly appeared, people got scared, news was bad and new investors want to get out. Bitcoin price automatically goes down.
What Should You Know About The Future Of Bitcoin?
This is not the first time Bitcoin price went down fast but it is much easier to notice it as the value of the coin is so high right now. As always, the golden rule of making any investment is:
“Diversify your investments!”
This is also true with crypto currencies and anything else you might want to invest in. The fact that governments start to ask for regulations is actually a very good thing for the future of Bitcoin. It means that governments now acknowledge digital currencies and see them as being viable. However, it also shows that people at high levels in governments realize there are many problems with Bitcoin and crypto.
What should you do?
For starters, you should not panic at the moment. Everything that is happening right now is normal and expected. Selling Bitcoin is not a good idea right now. The value of BTC is going to keep going down for a while, most likely going under $8,000. However, as governments start to implement regulations and online security is increased, together with people being more and more educated, prices will go up again.
You should also start looking at other crypto currencies. Always remember the fact that Bitcoin has a huge scalability and applicability problem at the moment. Technology needs to change until BTC will be used at the local supermarket or in real life in general. This, most likely, means a new hard fork, one that was desired by many recently but ended up being cancelled because of not being adopted by Bitcoin investors.
The bottom line is that Bitcoin is still strong and can still be considered as a very good investment. You just have to be careful and keep your eyes on the specialists and have news alerts set up so you know exactly what is happening.