Why is Bitcoin falling?

Everyone remembers Bitcoin's meteoric rise, which soared to $19,000 per unit in just a year.

But this situation didn't last long: within a week, the asset dropped several thousand dollars and then continued to decline.

Why is Bitcoin falling? What happened to this electronic currency?

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

After the surge in demand for trading popular cryptocurrencies, no one really thought about what they were buying.

In fact, Bitcoin is nothing more than a digital recording in a computer's memory that cannot be worth tens of thousands of dollars.

 

Logically, it cannot exist as an independent entity, since it is not backed by any material assets. For example, the value of any currency is guaranteed by the gold reserves of the country in which it is issued, but Bitcoin has no such guarantee.

Reasons for unprecedented growth.

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

Why did Bitcoin start to rise? Nothing new happened; once again, the culprit was panic buying, with people paying for air en masse, thereby driving the price up to an invisible level.

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

When the price became affordable for small investors, the digital currency began to be sold in installments, making it accessible to everyone again.

It was the rapid initial rise and the subsequent surge in demand that became the main reason for the unprecedented price surge.

Reasons for the fall of the Bitcoin exchange rate.

A price driven by hype is always quite volatile, so the slightest trigger can trigger a collapse.

This is precisely what happened in our case: the beginning of 2018 was marked by reports that the Chinese and Korean governments intended to tighten controls on cryptocurrencies, and almost simultaneously, one of the largest hacker attacks on a crypto exchange in Japan occurred.

These several factors contributed to the decline in Bitcoin's price, 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 sell orders begins to exceed the volume of buy orders. The largest investors began to exit the market, dumping lots worth tens, and sometimes hundreds, of millions of dollars.

As the decline began, smaller investors rushed to sell, further driving the price decline.

What will happen next with Bitcoin?.

Logically, a stable Bitcoin exchange rate could be ensured by pegging it to a global currency. Similar to how electronic payment systems work, but with anonymity.

However, this is only theoretical; in reality, the Bitcoin price will fall to $2,000 per unit, and then begin to rise again.

In the long term, a price range of $2,000-$3,000 could be identified, but only until a more attractive 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