Recently, the Bitcoin price has taken a sharp dive, hitting as low as $2,984 per coin on Friday, 12 AM UTC, from the price of about $4,404 at the same hour the week before. Why is this happening? There are many factors.
Chinese Government Cracking Down on Bitcoin Exchanges
Chinese bitcoin exchange BTCChina has announced that it will cease all trading from September 30. Since the start of this month, bitcoin has fallen over $1,000 in price due to the speculation that the Chinese government is launching a crackdown on exchanges. In addition to that, the JPMorgan Chase CEO – Jamie Dinmon, expressed his negative opinion of bitcoin:
It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed. Currencies have legal support. It will blow up.
He suggests that Bitcoin is a fraud, a scheme, that will ultimately break down.
Bitcoin a Financial Bubble?
On top of all of this, there are rising fears of Bitcoin being a financial bubble after it’s dramatic price increase from just under $1,000 to an all time high of over $5,000. Traders feel that it could burst any second, thus the price decrease.
Another JPMorgan Chase employee – Marko Kolanovic, the head of quantitative and derivatives of the company, has also expressed criticism of the cryptocurrency. In a client note, he wrote:
Cryptocurrencies cannot be reliably valued and they have significant ‘tail risk’ that could come in the form of a regulatory ban. Moreover, the whole cryptocurrency market exhibits some parallels to fraudulent pyramid schemes.
North Korea attacks on Bitcoin exchanges
The next factor of the price drop could be North Korea’s hacking attempt on cryptocurrency exchanges as sanctions on the country hit. According to a news report from a cybersecurity firm FireEye, one of the targets was a South Korea-based exchange Yapizon, while others were not named. A crypto exchange Bithumb was hacked in June, with losses totaling over $1 million dollars, but it’s unclear whether North Korea was involved.
Nevertheless, there are positive remarks about Bitcoin in midst of all these events. Naeem Aslam, chief market analyst at Think Markets UK, said:
The digital currency is here to stay and under a more regulated environment, its volatility would ease off. Moreover, this is not the first time that Jamie Dimon has spoken against the currency, the last time he had a similar go on the currency was in November 2015. Since then, the currency has had a remarkable run.
Stay tuned for more updates about the recent situation of the cryptocurrency markets!