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Cryptocurrency collapse, governmental crackdown

By Patrick Higgins  |  02/02/2018 15:07

Bitcoin continues to plummet, 40% of value lost since 2017

The value of Bitcoin continues to plummet as various international bodies move to crack down on the cryptocurrency craze

Since the start of the year, Bitcoin has declined by more than 40% from $13,800 to $7,850 on the Bitstamp exchange, well below a high of $19,666 last year.  Shockingly, 12.7% of that decline comes from just earlier today.

Bitcoin, the world’s most preeminent cryptocurrency, has come under fire for its rapid gain in value within the last year, due to its perceived uselessness as a currency commodity without further market integration.  Such integration is, in fact, occurring slowly but is coming under fire from traditional financial institutions and various governments, who argue that Bitcoin and other various cryptocurrencies are scams and utilised by various illicit spheres of society for crimes such as money laundering and drug trafficking.

Regulatory clampdown

Such anti-crypto governments include the countries of India, China, and South Korea, which have all promised to ban and eradicate the usage of crypto-assets in their respective countries.  Additionally, various segments of the American socio-political environment have also voiced concerns over the use of cryptos such as Bitcoin.  Just this week, the SEC has accused various “banks” and “hedge funds” such as AriseBank, which conduct ICOs (initial coin offerings) for various crypto start-ups, of lying to investors about the potential returns of ICOs and accused them of “scamming.”  Furthermore, various social media firms such as Facebook have banned Bitcoin and other cryptocurrency sellers from advertising on their websites, citing many cases of seller usage of fake information and misleading figures to coerce unaware/ignorant people into blindly investing their money. 

Is now the right climate for crypto expansion?

Such sentiments from these countries, compromising a huge share of the global population and economy, as well as having some of the highest usages of cryptocurrency, do not reassure crypto investors, especially those with Bitcoin, that crypto is yet an entirely stable investment.  Bitcoin, which until the beginning of last year consistently was valued at around $700-800, is driven largely by speculation and “pump and dump” investors.  This speculative investment is not limited to Bitcoin, it has been documented in recent weeks that many companies have added words such as, “blockchain,” and, “crypto,” to their company names in order to drive up stock prices, even if the companies have nothing to do with cryptocurrencies.  Amazingly, it has worked, with the most prominent example being Kodak, the camera company.  Though the company has not changed its name, it did announce to the press last month that Kodak would launch its own crypto called, “Kodakcoin,” and would deliver an ICO.  Upon hearing this news, the stock value of Kodak proceeded to jump over 120% in value. However, the fact that such a move would work highlights the speculative nature of the cryptocurrency market, and underlines the question, “if crypto lacks the integration necessary for straightforward investment, and seems to be driven by get-rich-quick mindsets, what is the point of investing right now?”  Indeed, with heavy pressure upon the entire cryptocurrency movement seeming to be coming from the world’s most powerful governments and institutions, one must wonder if now is the time to embrace cryptocurrency? 

Any information, analysis, opinion, commentary or research-based material on this page is for information purposes only and is not, in any circumstances, intended to be an offer of, or solicitation for, a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any person acting on it does so entirely at their own risk and GKFX accepts no responsibility for any adverse trading decisions. You should seek independent advice if you do not understand the associated risks.



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