All good things must end, and bad things also. Bitcoin has had a good trip during the last year, but that seems to have ended given that almost 60% of its value has vanished in a month. The excitement in the cryptocurrency market is currently so low that the value of Bitcoin fell below $ 8,000, for the first time since November.
According to the popular cryptocurrency app Coinbase, the price of Bitcoin fell to $ 7,540 at the beginning of the morning of this Friday, February 2, although it rose again to almost $ 9,000 at noon. This incredible and accelerated increase in its value during the last weeks was not sustainable, and even the most believers in the cryptocurrency revolution did not think that the value of 20,000 dollars of Bitcoin was going to be maintained for a long time. However, most did believe that the value was not going to fall below $ 10,000. This kind of baseless claims are often wrong, but what is happening seems to be a massacre.
In just 24 hours around 30,000 million dollars have disappeared from Bitcoin's market capitalization. The data of CoinMarketCap reveal that all the cryptocoins of the Top 100 have fallen considerably, with the exception of five of them. In total, Bitcoin has lost 177,000 million since its peak value in December.
It is not difficult to understand why this is happening. Even if you are one of those who really believe that blockchain technology is the future and decentralized currencies will find their balance, it is impossible to ignore that the only thing we have seen in recent weeks has been bad news for the cryptosphere.
What is perhaps more problematic, both for the bitcoiners of all life and for newcomers, are the increasingly constant regulations of different governments around the world that seek to regulate cryptocurrencies. Financial analyst Nouriel Roubini of Roubini Macro Associates told Bloomberg: "Almost everyone who creates G20 policies and legislation is talking about taking action." This week officials from India indicated that they will soon implement regulations to completely eliminate payments with cryptocurrencies in their country, in addition to officially declaring that India does not recognize Bitcoin as a legal currency.
Steven Mnuchin, US treasury secretary, also commented this week that he wants G20 members to discuss regulations for cryptocurrencies when they meet at the annual summit that will be held in March. Until now the United States has kept distanced from cryptocurrencies, just waiting to see what happens. But the United States Internal Revenue Service (IRS) wants its share of this money, and investors in cryptocurrencies are already beginning to experience how it is to pay Uncle Sam some of the free money they have obtained. A user of Reddit, after visiting his accountant, commented: "Fuck the taxes. This is so fucked up that I practically did not win anything. " And it's not just the federal government that wants your taxes, the states too. A bill in the state of Arizona seeks to require residents to pay the state a portion of their earnings.
Although successful companies like Facebook are trying to purge their services of cryptocurrency scams, companies that falter, such as Kodak, have seized the opportunity to attract investors by including buzzwords, such as blockchain, in their business plans. Kodak was supposed to launch its initial coin offer (ICO) on Wednesday, but after the New York Times revealed more information about the company's plans, Kodak said it needed more time to investigate potential investors. Most of the profits that Kodak shares produced after its blockchain announcement have already disappeared.
The most infamous company capitalizing on this trend, formerly known as Long Island Tea Corp, seems to have changed its mind and will no longer buy the 1,000 systems to mine cryptocurrencies that it said it would buy. However, the company continues to be called Long Islanc Blockchain.
If you look at the history of Bitcoin, it has had several big up spikes followed by a big retracement in the past. It will be interesting to see how low it goes this time. If cryptocurrency has a chance of getting a small percentage of all the currency in circulation, I think it should have no problem having a market cap in the trillions. I don't think this is a bubble bursting, because that's more of a one off event and this is something that keeps happening. It's probably not much to do with the news either, I thought Bitcoin was worse to use when it was heading for $20k than it is now, at under half the price. The good news about the lightning network has been completely ignored. I think this is just normal price action in a relatively new and volatile market.
HODL and you will be fine
Pay close attention to the past because history ALWAYS repeats itself.