Cryptocurrency star Bitcoin plunged to a two-month low last week making speculators and intellectuals ask the burning question- is this the end of the cryptocurrency craze? Bitcoins, at $9,000, are seeing a two-month low since November 2017. And the trend is the same for all cryptocurrencies indicating that investors are not jumping ship to altcoins but are actually abandoning the crypto bandwagon for good. So, has the bubble burst or is this a temporary slump?
Before we make any sweeping statements devoid of any real logic or data, let’s look rationally into the recent spate of bad news hitting Bitcoins and that could be the reason behind this bloodbath:
Leading Banks prohibit Bitcoin purchase using credit cards
CNBC, J.P. Morgan Chase, Bank of America and the Citigroup banks have disallowed purchase of Bitcoins using credit cards. Llyods, U.K.’s high-street bank joined the ban yesterday. And, this spells disaster for crypto investors 18% of whom used credit cards for buying Bitcoins. The announcement is in response to a recent poll by LendEDU that stated that 22% crypto buyers using credit card haven’t paid off their outstanding debts. It spells red for banks as well as card owners who are paying through their nose for interest on an asset fallen from grace.
Cryptocurrency expert Chris Verrone says investments on Bitcoin should be held off until the currency stabilizes after this brief correction period.
Bitfinex exposed- Bitcoin prices were being propped up
Bloomberg reported on Tuesday that Bitfinex exchange has been artificially propping up rates of Bitcoin to create positive vibes in investors. Bitfinex has been subpoenaed by the Commodity Trading Futures Commission, U.S. regulatory body. Bitfinex has a notorious reputation for its questionable business methods and ties to Tether, a rival cryptocurrency, that seems to gather momentum whenever Bitcoins plunge to lows. This revelation led to big-time sell-off of digital currencies.
Tether, is a cryptocurrency valued neck to neck with the American dollar, a feat not found in other virtual currencies. Tether valuation makes it an attractive investment. Things became murky when experts observed a strange trend- Tether trading showed upswing whenever other cryptocurrencies were heading south. It rang alarming bells when Bitfinex association with Tether was proved. Coindesk reports that Tether and Bitfinex lean on each other to manipulate the market. Investors are now vary whenever Bitcoin prices show rally and wonder whether the news is authentic or Bitfinex tactic to sell Tether.
Facebook bans ICO advertisements
Facebook’s new advertising policy prohibits using the platform for advertising of Initial Coin Offerings (ICO), cryptocurrencies and binary options. Facebook product Manager, Rob leathern, said in his blog post that he doesn’t want the beloved social platform to be misused by these products and services that he considers “misleading and deceptive.”
Facebook is an insanely popular platform with nearly 2 billion users logged in monthly. The new policy closes lucrative doors of reaching and converting wide global audiences into Bitcoin investors. It also shows Facebook’s distrust in Bitcoins, a feeling that won’t go down well with Facebook followers.
South Korea orders Bitcoin traders to disclose identity
South Korean government spooked Bitcoin traders by directing them to reveal their real identity in order to buy, sell or trade Bitcoins. Traders will be required to furnish photo identity evidence and the rule becomes applicable from today. This is an effort to prevent money laundering and hacking instances using cryptocurrencies. Though the move will be beneficial in the long run, it dents Bitcoin’s claim that its transactions are pseudo autonomous.
Indian budget rejects cryptocurrency
Indian Finance Minister, Arun Jaitley, presented the annual budget for the country and declared sternly that crypto currency is not legal tender. He said all measures would be taken by the government to curb Bitcoin use as a payment system and as a financing option. The Indian government’s negative stand on cryptocurrency is another death knell for Bitcoins in a country where they were just gaining ground.
While experts view this low phase as an auto-correction exercise that will plateau Bitcoin prices, investors are advised to tread with caution in coming times.