Why is Bitcoin falling?

Everyone perfectly remembered the dizzying rise of Bitcoin; literally within a year the rate soared to 19 thousand dollars per unit.

But this situation did not last long; within a week the asset fell in price by several thousand and then continued its decline.

Why is Bitcoin falling, what happened to this electronic currency?

1. What is cryptocurrency?
2. Reasons for the unprecedented growth.
3. Reasons for the fall.
4. What will happen next.

After the rush of demand for trading popular cryptocurrencies appeared, none of the buyers really thought about what they were buying.

But in fact, Bitcoin is nothing more than a digital record in the memory of a computer that cannot cost tens of thousands of dollars.

 

Logically, it cannot exist as an independent unit because it is not provided with any material values. For example, the value of any currency is guaranteed by the gold currency reserves of the country in which it is issued, but Bitcoin does not have such a guarantee.

Reasons for the unprecedented growth.

History tends to repeat itself; from school textbooks we remember the situation with Dutch tulips, when the cost of one bulb was equal to the cost of a house. And after the crash, the price dropped to the cost of ordinary flowers.

Why did Bitcoin start to grow? Nothing new happened in this situation; again, rush demand was to blame; people began to pay en masse for air, thereby raising the price to an invisible height.

The price was also boosted by large injections of the black market, when people with large capital also decided to hide their savings in cryptocurrency.

When the price became prohibitive for small investors, the electronic currency began to be sold in parts, thereby making it again available to everyone.

It was the rapid rise at the beginning and the rush of demand that became the main reason for the unprecedented rise in the exchange rate.

Reasons for the fall in Bitcoin exchange rate.

A price based on hype is always quite unstable, so the slightest reason can trigger its collapse.

The same thing happened in our case; the beginning of 2018 was marked by reports that the Chinese and Korean governments intend to tighten control over cryptocurrencies; almost simultaneously, one of the largest hacker attacks on a crypto exchange occurred in Japan.

These several factors caused the Bitcoin price to fall, creating panic among investors who had invested in this asset.

The second significant reason was that the market entered the so-called overbought zone, when the volume of orders to sell begins to exceed the volume of purchase transactions.

The largest investors began to leave the market, throwing up lots worth tens and sometimes hundreds of millions of dollars for sale. As the fall began, smaller investors rushed to sell, thereby further pushing the price decline.

What's next for Bitcoin?

Based on logical considerations, a stable Bitcoin exchange rate could be ensured by peg to one of the world currencies.

How this is implemented in electronic payment systems, but with an anonymity function. But this is only in theory; in reality, the Bitcoin rate will fall to $2,000 per unit, and then begin to rise again.

In the long term, it is possible to determine a price corridor between $2,000 and $3,000, but only until a more interesting cryptocurrency appears on the market.

Read also:

The most popular cryptocurrencies in 2019 - http://time-forex.com/kriptovaluty/perspekt-kripto

Why is cryptocurrency trading more profitable - http://time-forex.com/kriptovaluty/treyding-kriptovaluty