After rising in morning trading on Tuesday, bitcoin was back in the red on Wednesday morning, plummeting under $6,100 as the broader digital asset market slumped. On Sunday afternoon, bitcoin dipped as low as $5,787 marking the cryptocurrency’s lowest price so far in 2018. So what exactly is happening to Satoshi’s cryptocurrency?
Spencer Bogart, Blockchain Capital partner and self-proclaimed bitcoin “super bull,” said that prices could dip even further this summer. Bogart explained that many of those hedge funds are now hitting their one-year lockup, meaning that with prices down more than 50% for many cryptos a number of liquidity providers will be looking to sell. That could add intense pressure on bitcoin and other digital assets pushing prices artificially lower.
Nations Ruling Out State-Backed Cryptos
Australia and New Zealand have both officially ruled out the possibility of creating a central bank-backed cryptocurrency in the near future, according to the Reserve Bank of Australia’s head of payments policy Tony Richards. In his speech last Tuesday, Richards said that although the bank has found little demand for a bank-backed crypto, there could be “significant implications for the bank’s financial stability mandate” should the broader public adopt digital currencies at higher rates.
Federal Trade Commission Warnings
Another reason behind the current cryptocurrency crisis is the Federal Trade Commission warnings to consumers that continue to invest capital in non-transparent ICOs. The FTC stated that that consumers lost $532 million to cryptocurrency-related scams in the first two months of 2018. FTC’s Bureau of Consumer Protection head Andrew Smith said that this figure could balloon to as much as $3 billion by the end of the year.
A Domino Effect
Unfortunately, well-established cryptocurrencies are now paying the price for all the unlawful crypto-scams. Bitcoin’s once-utopian community has been roiled by escalating factional conflicts and growing awareness that 2017’s boom in Initial Coin Offerings (ICOs) was driven by a substantial portion of shaky projects and outright scams. The SEC has begun aggressively cracking down on crypto scams, but they’ve clearly helped take the wind out of investors’ sails. According to researchers from the Stevens Institute of Technology in Hoboken, New Jersey, Bitcoin’s value is largely manipulated by public sentiment and other major cryptocurrencies are no exception!
Source: Investing, Jun 26, 2018 5:00 PM EDT | Fortune June 24, 2018
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