Wednesday, January 31, 2018

Why is Bitcoin Dropping? (UPDATED)

31st January 2018: Bitcoin is having its worst month in 3 years, claims Wall Street Journal. And rightly so.
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Why is Bitcoin Dropping?
On Tuesday, Bitcoin price plunged below the landmark $10,000, trading at its 2-week low of $9,817 according to CoinDesk. Although the price bounced back up quickly to the 5-figures territory, the trend is still looking bearish.

Many believe that the cryptocurrency is forming a base at around $10,000. However, at the moment, the general consensus is that price will dip even further if Bitcoin breaks the support of $9,780. It could reach as low as $7,500, testing this very crucial resistance.

Right now, 5-day, 10-day and 50-day Moving Average (MA) all look bearish. But if Bitcoin manages to trade over $10,000 margin in the next day or two and drags itself to the $11,500 zone, we could see the bulls rising.
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Price of Bitcoin and other Cryptocurrencies falling
Why is Bitcoin dropping right now is not absolutely clear, given the entire cryptocurrency world is in a state of uncertainty and fear of invading government regulations. South Korea news of banning cryptocurrency exchanges is still affecting the Market. Plus, the small developments emerging from different parts of the world is sending investors/traders into skepticism—few of them are in panic selling mode.

Most recently, Bloomberg reported that Commodity Futures Trading Commission (CFTC) has issued subpoenas (a sent notice to produce documents and appear in the court) to Bitfinex, one of the world’s largest exchanges, and Tether, a start-up company behind the much controversial token USDT. This instantly triggered panic in the cryptocurrency world with traders started selling off their chunk in mass. You can read Bloomberg’s article in full here.

Like mentioned, if Bitcoin drops down below $9500, all eyes will be on the $7500 support. From next few hours to this coming weekend, things look critical. People need to trust Bitcoin and stop panic selling altogether.

READ: Bitcoin Price Prediction 2018

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22 January 2018: Monday Morning Eastern Time, Bitcoin – along with other major Cryptocurrencies – saw a major drop in their value. The movement was rather sudden that caught everyone off-guard.

Bitcoin tumbled to as low as $10,376 according to Coinbase—experiencing an 11 percent drop in its value from its peak in the last 24 hours.

Why prices fell of major Cryptocurrencies is still not very clear. However, Reuters is reporting that this erratic price movement was a reaction to a research done by renowned Ernst and Young that claims more than 10 percent funds raised by ICO (Initial Coin Offering) are stolen in a cyber attack done by hackers.

Phishing was the most widely used hacking technique for ICOs, with hackers stealing up to $1.5 million in ICO proceeds per month,” reports Reuters.

Here's Bitcoin's price in the past 24 hours...

bitcoin-crash-2018, bitcoin-news, bitcoin-price, is-bitcoin-crashing, why-bitcoin-is-falling, why-bitcoin-price-is-going-down, why-is-bitcoin-dropping,
Bitcoin Price Fall - January 22

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January 17, 2018: On Wednesday, Bitcoin price dropped below the $10,000 mark. This represents a 50 percent drop in its value from its mid-December all-time high of around $19,800.
When will Bitcoin recover? Well, not in the next 24-48 hours. Technical analysis is showing that the price could further go down to trade anywhere around $8000 in the next couple of days.

This massive drop comes in the aftermath of reports claiming that China is planning an even wider ban on cryptocurrency trading in the country.

Vice Governor of the Central Bank of China, Pan Gongsheng has said the government is going to impose stricter regulations to end all the cryptocurrency trading-related activities and services. The plan is to block all the domestic, as well as foreign platforms, that allow investors in China to participate in cryptocurrency trading.

At the moment, it isn’t clear when any of such policy will come into action. However, the move is supposed to prevent market risk and keep the impact of cryptocurrency on the Chinese economy at the minimal.

Incidentally, it's not just Bitcoin that's going down. Almost all the major cryptocurrencies are trading far worse than Bitcoin.
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Bitcoin Crash 2018? Nah!!
So relax. Don't jump to term this development as 'Bitcoin Crash 2018'. ;)


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January 12, 2018: Bitcoin took a big hit on Thursday when South Korea’s Justice Minister said that they are preparing a bill that would ban all cryptocurrency trading on the domestic exchanges.

In a conference attended by Reuters, Minister Park Sang-ki said, “There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges.”

Following this statement, Bitcoin price fell down by as much as $2000 on South Korea’s Bitcoin exchanges.

On the global scale, according to Coinbase data, Bitcoin fell more than 12 percent from its day’s high. People across the world began panic selling.

However, soon after, the price rallied up more than 7 percent off its low after South Korea’s presidential office told Reuters that the ban plan “had not yet been finalized”.

Reuters also added that the bill on banning Cryptocurrencies “could take months or even years” to pass the country’s legislative body.

Bitcoin is finding a consolidation at around $14,000. At the time of writing this – 21:30 IST – it is trading at $13,875 or Rs 8,83,153 (according to Coin Market Cap).

Things are looking calm at the moment. The 50 days Moving Average of Bitcoin continues to rise in favor of a bull run ahead. However, the market is expected to remain bearish in the immediate span with a short-lived dip below $12,000 expected.

According to Coindesk, if Bitcoin crosses the Jan 6 high of $17,174 before Monday, we can see the price rally to the all-time high of $20,000.

Read about the legality of Bitcoin in India: Is Bitcoin Illegal in India and what if It becomes illegal?

Also Read: How to Buy Sell Bitcoin in India – A Complete Guide


December 22, 2017: Thousands of people are panic-selling their Bitcoins. And the reason seems quite just!

In just a span of five days, the price of Bitcoin has dropped by about one-third.

While its priced soared and touched the symbolic $20,000 mark (on few exchanges) in the first half of December, it is now trading at around $12,478.

(Also Read: Learn Everything About Bitcoin)

The drop isn’t just for Bitcoin. Other Cryptocurrencies too have been battling the free fall. At one point, Ethereum was down by 28 percent, plunging below $550. Bitcoin Cash dipped by 37 percent in the last 24 hours.
bitcoin-news, bitcoin-price, why-bitcoin-is-falling, why-is-bitcoin-going-down, bitcoin-plunges, why-bitcoin-price-is-going-down, is-bitcoin-crashing
Price of Cryptocurrencies Falling in the Past 24 Hours
Needless to say, the traditional “experts” and theorists were quick to pronounce it – what’s seems to be a big correction – a crash. Bitcoin has always had ‘bubble-warning’ sirens lurking overhead anyway.

Is Bitcoin crashing” has become a very common question of during every price dip.

Notably, even with such huge drop, Bitcoin is still roughly 30 percent up since December 1. And it’s overall 1300 percent up since the start of 2017.

Anyway. Admittedly, the falling prices have even some hard-core Bitcoin enthusiasts in worry.

“What is concerning me is that as our popularity grows, the BTC network is starting to confirm our concern that it is unable to function at a reasonable rate and fee. The network is getting bogged down by volume and increased transaction fees,” said an individual, as quoted by Financial Times.

With so much of action happening in the crypto world as of late, the most obvious question that comes up is—“Dude, why is Bitcoin going down today?” *in cool voice*

The answer isn’t definite of course, given the market movement depends on an awful lot of factors. But here are 5 reasons why is Bitcoin going down:

5 Reasons Why Bitcoin is Falling

1. It is the Holiday season

bitcoin-news, bitcoin-price, why-bitcoin-is-falling, why-is-bitcoin-going-down, bitcoin-plunges, why-bitcoin-price-is-going-down, is-bitcoin-crashing
Why Bitcoin is Falling- Reason #1
People are cashing out their profits to buy Christmas gifts for friends and families. 

And this is quite evident in the fact that Bitcoin has lost more than $120 billion of its total market value in less than a week.

All this money can’t be pulled together at the same period to be invested in other Cryptocurrencies. And saying people are losing faith in Bitcoin would be just as absurd.

Yes, a major reason behind this big correction is the season we’re in right now – that, honestly, not many people factored when doing their Bitcoin forecast.

The Holiday season is truly upon us!


2. Increasing transaction fees

bitcoin-news, bitcoin-price, why-bitcoin-is-falling, why-is-bitcoin-going-down, bitcoin-plunges, why-bitcoin-price-is-going-down, is-bitcoin-crashing
Why Bitcoin is Falling- Reason #2
It’s no secret to anyone. Bitcoin transaction fee is ridiculously high. And it is increasing by passing day due to crowding on the network.

In fact, two weeks back, the daily average fee to send a Bitcoin transaction hit an all-time high, touching $26 mark. And in just about 14 days, that number has reached more than $50.

This puts a dent in the sustainability and long-term value of the Bitcoin. And this – along with higher volatility – is something that, till now, has kept institutional money still on the boundary lines.

The root problem has been a cause of few Bitcoin forks. Litecoin being the most notable, which runs on a much faster system.

Good news is that the solution to overcrowding is on the way. Many believe implementing the upcoming feature Bitcoin Lightning Network (LN) can dramatically reduce the transaction cost and eliminate all the delays there are.

3. Segwit2X is back

bitcoin-news, bitcoin-price, why-bitcoin-is-falling, why-is-bitcoin-going-down, bitcoin-plunges, why-bitcoin-price-is-going-down, is-bitcoin-crashing
Why Bitcoin is Falling- Reason #3

Remember the hyped hard fork that was supposed to happen this past November 14 but got canceled?

Yes, the same one! It is back in the scene.

Long story short—there’s basically a group of developers who believe Bitcoin network should be updated to keep up with the growing market. And they are backed by big names and large corporate entities.

But there is a traditional group of investors (huge in number) who believes doing so would do just the opposite of what Bitcoin is supposed to be—a decentralized currency.

This former group of people – called Segwit2X – wants to divide Bitcoin in two (much like Bitcoin Cash, Bitcoin Gold).

Last time, the fork got canceled. But they are back again in the picture. News are coming that they are preparing for a hard fork in the coming weeks.

No date has been fixed yet. Still, this puts a big shadow on the original Bitcoin, which anticipatingly can be taking a big hit.

4. Emerging alternative coins

bitcoin-news, bitcoin-price, why-bitcoin-is-falling, why-is-bitcoin-going-down, bitcoin-plunges, why-bitcoin-price-is-going-down, is-bitcoin-crashing
Why Bitcoin is Falling- Reason #4
Admittedly, Bitcoin stole all the spotlight in 2017. But it wasn’t the fastest growing Cryptocurrency. That title goes to Ripple, whose price is up by a whopping 19,500 percent. 

Ripple is the third largest cryptocurrency in the world, in terms of market cap, touching its ATH only last week. Actually, it is fighting with Bitcoin Cash for this third spot, with each going back and forth.

Ethereum is the second largest cryptocurrency.

Litecoin, as well as Dash, too, has been garnering lots of interest among the investors.

So many people are now flocking to these altcoins for an early start. This hasn’t taken away any charm of Bitcoin in the market. It has, however, spread the attention and money that Bitcoin would have got in the first place. 

(Also Read: 11 Things You Don't Know About Bitcoin)

Interestingly, the majority of the cryptocurrencies! (So your question shouldn’t be why Bitcoin price is going down. Your question should be why is cryptocurrency going down today—the whole cryptocurrency world! ;))

5. Unbelievable growth

bitcoin-news, bitcoin-price, why-bitcoin-is-falling, why-is-bitcoin-going-down, bitcoin-plunges, why-bitcoin-price-is-going-down, is-bitcoin-crashing
Why Bitcoin is Falling- Reason #5
In the past 3 weeks, Bitcoin has been increasing in value by a seamless margin. In fact, it was moving well over $1000 on a daily basis. 

Here’s a simple picture: It took Bitcoin 1,230 days to reach $1000, another 1269 days to reach $2000. It only took 7 days to move from $7000 to $8000. And this growth has been consistent and denser ever since it crossed the hallmark $10,000.

Its super-fast growth had to stop somewhere for proper correction. Otherwise, we would have seen it trading $50,000 in just one month at the current pace.

The unbelievable growth is also its biggest reason for the Bitcoin falling right now.

So… 

If you have just invested in Bitcoin and are panicking over the falling price—RELAX!

We know you have been told this countless times already, but—RELAX and HOLD. Panic selling right now would be the biggest mistake here.

Understand that Bitcoin plunges every once in a while. This type of action in the Bitcoin world has happened before—not exactly at this volume, but it has happened. It’s what we call a correction. A healthy correction.

Take it this way— after having an incredible run, the market has stopped, taken few steps back, shrugging off some dust, and will be ready for another amazing run in no time.

So every time Bitcoin plunges, stop asking “Is Bitcoin crashing”!

Such pullbacks are quite expecting and, at times, required for the market to function properly. So stop panicking, STOP watching news and their bogus opinions.

In fact, if possible, now that the price is low, buy Bitcoins right away.

Read: Where to Buy Bitcoin in India?

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