All transactions having to do with bitcoin were put on hold on Friday into the weekend as bitcoin begun to rise in value again. The past week has not been so good for bitcoin users as the cryptocurrency has been seen to drop from its record high $20,000 to below $11,000. Due to this, most cryptocurrency exchangers brought all bitcoin buying and selling to a standstill; at least temporarily.
Bitcoin’s value has grown increasingly over the past few weeks. It shot from $5,000 to almost $20,000 within a space of just two and a half weeks. Overall, its growth in 2017 has been very phenomenal considering that it began the year with values revolving around a $1,000 and no further. However, most cryptocurrency and business market analysts have warned that this fast-paced growth could be a big bubble that is very close to losing its gas.
The fall in price on Friday led most of the cryptocurrency exchange services to halt all transactions of bitcoin; be they buying or selling. Coinbase was one of these services to withhold bitcoin transactions. Their reason was that they were facing serious technical problems that were being caused by high traffic. The fall in price value was not only to bitcoin, but several other altcoins also experienced same. Most people believe that the drop was caused by a fear amongst most digital coin owners who believed that the cryptocurrency was going to fail and thus resorted to selling their cryptocurrencies. As people lose hope in a cryptocurrency amidst speculations that it is a “bubble about to burst”, they try to recoup their investments by selling them rapidly. Eventually they reduce the number of people who are really in demand of the currency as they “sell their way down”.
Oliver Isaacs, an entrepreneur and investor, had quite a lot to say about the fall in price of most cryptocurrencies as he described it as being the result of a certain herd mentality. He explained that
“Just as people feared missing out on the way up, the idea you can actually lose money is also a new emotion investors are experiencing and people, especially retail investors, are selling manically on the way down.”
What is quite unfortunate about bitcoin is this; it is unregulated. Due to this, there aren’t any rules that determine whether or not a large-scale sell-off should take place or even stop, one should it happen. The last of defence for bitcoin in such a situation is for the cryptocurrency exchanger to halt all transactions as what was done. Some analysts are optimistic about the growth of bitcoin, saying that the fall is just a temporary one. Others also believe that more of such falls should be expected in the coming year. Michael Jackson, of Mangrove Capital Partners believes that price drops like this are not so bad, and that eventually the prices will rise again. This was his statement
“The vast majority of long-term holders of bitcoin are still way in the money and have shown no sign of cashing out,” he said. “We see the exit of short-term speculators and we have seen it before. The fundamentals are still in place and there is no reason why the bitcoin ecosystem should not continue to develop.”
Featured Image via The Merkle
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