Bitcoin – Recent Trends
Bitcoin has been attracting headline for sometimes now. There have been advocates and opponents for the bitcoin. The value of bitcoin has seen both fast upward moves and dangerous downfall, in the recent past.
What is bitcoin?
Bitcoin is the most famous member of the family of cryptocurrency, or digital currency. These currencies got the name cryptocurrencies as they use rules of cryptography for generation and maintenance of units of currency. Bitcoin has been the face of digital currencies. It was the first and most valuable digital currency. Bitcoin and other crypto currencies are called decentralized digital currencies as they do not have a central regulator to issue currencies and set rules. It does gain its value based on demand and supply alone without having any underline security or commodity to assure the value.
Journey of cryptocurrencies in 2018
Cryptocurrencies had hit their peak in December 2017. For example, the bitcoin reached a high of $ 19,000. Thereafter, they witnessed a sharp decline in prices. In fact, the value of bitcoin eroded by 50% in just 13 days. Bitcoin, which is the most famous cryptocurrency, is currently trading below $7,000, nearly one third of its value at peak. The state of other cryptocurrencies is also same.
What caused the uptrend and downfall of bitcoin?
The fall in price of bitcoins and cryptocurrencies has happened after a period of extra ordinary returns. The expectation of investors of the future prospectus was the main reasons for the uptrend. Japan had allowed transactions in bitcoin. There were rumors that China and India would allow usage of cryptocurrencies.
But, the expectations did not tuen into reality. BTC China, a major bitcoin exchange stopped trading on September 30, 2017. Other exchanges like ViaBTC, YoBTC and Yunbi in China also followed suit. It was due to strict regulations. India has been skeptical about the usage of cryptocurrencies. In February 2018, Finance Minister indicated that digital currencies have no legal tender status. And in April, central bank directed banks to disassociate from those dealing in crypto currencies, thus making the trading illegal. Goldman Sachs, too had warned investors in February 2018 that cryptocurrency prices are headed to zero as they lack intrinsic value.
On the other side, the supporters see the sharp correction as an opportunity for fresh investments. They point out that corrections in the past turned out to be short-lived
The future of cryptocurrencies
Cryptocurrencies still continue to show a downtrend that began in second half of December 2017. Rapid change in investor sentiments followed by huge volume trade is required to reverse the trend.
Cryptocurrencies have no fundamental value to point out and hence a huge population finds no reason to accept is as a medium of exchange. Digital currencies have not got the acceptance of national currencies which are issued and regulated by central banks of nations. Major portion of global population consider bitcoin or other cryptocurrencies only as a medium for speculation or gamble. Central banks have not even accepted the currency as alternative money.
