Why is bitcoin down? - Here’s why
September 04, 2020
Bitcoin prices are never constant. And this applies to most assets across the board. Stakeholders require solid reasons why bitcoin value is down. For each justifiable reason(s), they can align with their particular interest in investments.
The reality is many variables concurrently interact behind the scenes into what we perceive as the spot prices of bitcoin. Quite tricky, but puts traders and speculators to demanding tasks. On top of everything, it's the eternal attempt to predict why bitcoin falls and rises?
As of now, bitcoin price is so low considering extremes where it’s ever sniffed the $20,000 mark.
One indisputable variable ruling the way bitcoin prices fluctuate is the universal law of supply and demand.
Factually, the maximum mineable bitcoins remain at twenty-one million. That has consequential yet, intermittent results in the shifts with average bitcoins in circulation at any given period. Another coincidental fact is how bitcoin conforms to the qualities underscoring any legal tenders around. From an objective outlook, bitcoin is a legal tender. And, it seems whose central bank and commercial banks comprise the global people-driven economy.
Many blockchains exist to date, and most offer competitive features relative to the bitcoin blockchain. Why would one stay with bitcoin while other fantastic and fast solutions exist? The consequent is, the many net effects of adverse outcomes sequentially add to the trail relating to the fall of bitcoin in value.
Other Factors Why BTC Price is down:
Fall in Mining Incentives
The existence of the bitcoin blockchain is reliant on miners. As bitcoin nears the maximum mining levels- 21 Million BTC, it gets more complicated. Mining requires more energy, time, and sophisticated hardware, where all there transcend into massive operational costs.
The progressive loss of the incentives from bitcoin mining has a consequential effect on every bitcoin in circulation. The bitcoin blockchain requires mining nodes to keep it up to date. Any disincentive leads to the reason why bitcoin is down
Concerns Regarding Regulatory Authorities
Nations across the board are not on the same picture regarding the regulation of cryptocurrencies.
While some favour the adoption of digital assets, the rest are busy cracking down on the actors. If your nation curtails the adoption via stringent regulations, it's part of the cause why the most valuable digital currency is losing value.
Switzerland and Malta are great cryptocurrency hubs, while China and the US have opposite stunts relating to crypto-enthusiasts. The stringent financial regulations on the crypto-assets industry by globally leading economies press down on the value and prices. Entirely it accounts as to why bitcoin is down.
Market Manipulations by Large Actors
Market movers are stakeholders who call the shots, whether they are known or unknown. And, those concerning bitcoin are a factor never to ignore. The real reason their name stems from the fact that markets move their directions of the will. They stop at nothing, and on most occasions, it’s the inexperience of individuals and retail cohorts of traders that lose.
The fiction part is, market movers, do fake breakouts and pullbacks when it comes to price actions. Luckily for their part, they can incur and absorb heavy losses, unlike small traders, and make yet significant recoveries toward margins that favour them.
If market movers feel the price of bitcoin should go lower, they will keep pulling it downwards.
Perhaps the next move they'll make is to reverse trends, albeit to their advantage.
Restrictions on Supply of Power Consumption to Bitcoin Miners
Bitcoin prices may fall arising from the ever-increasing requirements in mining energy needs. Some authorities are wary and deliberately limit the supply levels of power to mining facilities in nations like Canada.
Ever since the rise of bitcoin as the first cryptocurrency, many changes have taken place. Sceptics cite bitcoin as a bubble, a scam, among many other defaming incidences.
First, no one wants to invest in uncertainty. And it adds more adversity to risk-taking with bitcoin as a bubble.
Second, in the boom of ICOs in 2017, around 80% of them were pure scams. Of course, significant incidents like the Silk Road saga affirms towards everything wrong with bitcoin.
More so, regarding incidences where crypto-economy bypasses taxation regimes are also points of more contest.
If you rally all the above incidences, bitcoin stands to lose. The losing fronts count from perception, and worse, the price of bitcoin gets lower.
Ripple Effects of Global-Scale Pandemics (COVID-19)
The effects of the coronavirus pandemic across the globe have more adversities than superficially seems. It's one of the reasons to blame for why bitcoin is down. Factually it was a slow down across many industries and the array of bitcoin stakeholders unspared by the spiralling economic effects.
If consumption slows, bitcoin miners slow down, and consequently, transaction speeds do. Overall, bitcoin virtually fades in value plus demand by extension.
On a generic scale, low spending injures demand across an entire economy. Uniquely, yet unluckily, bitcoin has no central bank to inject any forms of stimuli packages. Bitcoin prices keep spiralling lower.
Bitcoin price is down, and it will rise again.
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