Bitcoin continues tumble and is hovering around US$4,500
Possible contributing factors are the Bitcoin Cash fork and a quickening pace of ICOs converting their coins to fiat currencies
Some may have hoped that when Bitcoin fell below US$5,000, and then stabilised a bit, that the market would buttress further decline. That has not been the case.
As of publishing, the price of Bitcoin is US$4,579 with a 24-hour low of US$4,545. If we take the 24-hour low and compare it to the highest price over the last day, the market has crashed 16 per cent.
As per usual, secondary coins have fallen along with Bitcoin. Ethereum dropped US$24 (a 14.85 per cent dip to US$138), Litecoin lost US$4.88 (a 12.35 per cent to US$34.55) while Bitcoin Cash has plummeted by 19.96 per cent to US$211.
Speaking of Bitcoin Cash, the coin went through its pre-determined hard fork on November 15 (the coin’s protocol requires it to fork twice a year), which is widely being blamed for the current market conditions.
Why? Because the process was an unmitigated disaster.
Instead of following the protocol, the fork turned into an ugly fight between two sides of the Bitcoin Cash communicty and has essentially turned into a full-blown civil war over who will be the “real Bitcoin Cash”.
As of today, there is a coin called Bitcoin Cash ABC (the old one) and Bitcoin Cash SV (the new one). They are now battling for hashing-power to decide a “winner” (as if there will actually be one in this situation).
The face of Bitcoin Cash SV is Craig Wright, a crypto veteran who claims to be Satoshi Nakamoto. He is being blamed for using brinkmanship tactics to sabotage the hard fork.
Layla Harding of Coinnounce posited that this internal struggle has tanked the entire cryptocurrency market. Her logic is that these types of high-profile blowups scare off mom-and-pop investors who worry similar conflicts could hit other coins.
While the Bitcoin Cash drama is where a lot of analysts point to explain the crash, today’s drop comes five-days after the fork.
What may worry investors hoping to buy the dip is that the volatility index has also dropped. Today it is at 2.06 per cent, which is on par with a slow decline from 3.84 per cent in July.
Prior to the recent stumble, the price of Bitcoin had hovered in the low-to-mid US$6,000s from early September to Mid-November. Some worry is that we have reached a new normal whereby the price now hovers in the US$4,000 range for a few months. The volatility index would suggest this is a possible outcome.
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One other factor that may be contributing to the price drop is the decision by the US Securities and Exchange Commission to fine two blockchain companies US$250,000 for failing to comply with securities laws.
This impacts the market because people see it as another data point towards increased government regulations in the future. The result is that ICOs rush to convert their coins to fiat currencies before regulators impact their ability to do so.
If 2017 was defined by the Bitcoin Bubble, 2018 is the year it popped.
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Photo by Chris Liverani on Unsplash
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