Bitcoin at a two month low
Crypto investors are seeing red this week. Bitcoin plunged
to two-month lows on Thursday, dipping below $9,000 for the first time since
November. At the time of writing, Bitcoin had bounced back up to the $9,200
level, down from weekly highs just above $12,000. This week has seen coins
across the board in the red — a sign that investors are jumping ship to fiat
currencies this time instead of swapping into altcoins as we’ve seen in the
recent past.
At the time of writing, the total cryptocurrency market
cap weighed in at $459 billion, down from January highs around $830
billion. It’s a contraction to be sure, but not a low for the last 30 days
(that low cameon january 18).
Is this the bitter end for Bitcoin? For cryptos? Well, no, probably not.
Get your head screwed on right and you’ll see that (for better or worse) many
coins have seen unprecedented growth in the last six months to a year, even
with Bitcoin’s price halved from holiday highs closer to $20,000. On this day
last year, Bitcoin was sitting pretty at $982. At the height of December’s
craze, most reasonable crypto-watchers could agree that the price was
overheated and there was only one way for it to go in the short term. Still, in
the thick of the current correction, Bitcoin’s longer-term growth is anyone’s
guess.
Cryptocurrency die-hards expecting the price to bounce back, even
partially, will see these tanking numbers as the perfect entry point for
getting in low and maximizing gains. Late speculators who got in during the
mass crypto hysteria of the holiday season aren’t likely to have such steady
hands, a factor that’s likely contributing to the slide.
So what’s causing the slide to begin with? As usual, no one thing
can be blamed for Bitcoin’s current downturn, but recent skittishness around a subponea
for bitfinixand concerns around tether — a kind of cryptocurrency
counterpart to USD that matches the dollar one to one — probably factor in.
Recent news that Facebook would ban ads for ico’s probably didn’t help either.
And it seems like every day a newPonzi schemes get busted, throwing yet more
doubt on the credibility of plenty of less than legit ICOs.
Even beyond news cycle highs and lows, Bitcoin has seen a few mid-January
dips before, though 2017’s Bitcoin behavior certainly broke from any seasonal
patterns of the past.
Still, these growing pains are far from surprising. As cryptocurrencies
mature — assuming they continue to do so — regulatory “bad” news will become
more common. Countries across the globe will continue to struggle to accommodate
their citizens’ sudden interest in digital currencies — or not, in the case of
india, which just decided to ban them outright. Unsurprisingly, headlines like
these inspire a sense of foreboding among cryptocurrency enthusiasts wondering
which country will be next to come down hard. Fear, perhaps justified fear for
many speculators with plenty to lose, amplifies each new regulatory revelation.
But for cryptocurrencies to grow out of the current scam-laden chaotic era, a
thorough house cleaning is healthy.
Bitcoin and other cryptocurrencies have also looked less responsive to
positive news in the latter half of January compared to their
relative buoyancy during December’s dizzying highs. Then, every little
positive news blip seemed to push the prices higher.
Bitcoin aside, some altcoins might just be adjusting from
overheated, overhyped December highs. Ripple is a good example of this,
hovering around $1 Thursday, a price that’s five times its November value and
only looks bad after XRP flew a bit too close to the sun with sudden early
January highs above $3. Ethereum is also faring pretty well, all things
considered, down from all-time highs above $1,400 but holding most of its newly
built value after doubling in price from December prices around $500.
It’ll be interesting to see what happens as we move into next week’s senate
banking committee hearings on crypto currency . Titled “Virtual Currencies: The
Oversight Role of the U.S. Securities and Exchange Commission and the U.S.
Commodity Futures Trading Commission,” the open hearings will air on February 6
at 10:00 Eastern time. It’s possible that the upcoming discussion in Congress
has traders nervous, but ultimately variables from all over the globe combine
to affect the market every day.
For anyone considering riding out the current correction, a little
historical perspective — in this case, even a few months’ worth — could go a
long way
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