Bitcoin has been on the forefront of the minds of investors after taking an enormous stride in its value in 2017. Its value increased by 20 times in December, generating an interest among not only investors but also common people. Everyone began talking about bitcoin and finding ways to invest to get rich fast. However, the recent turn of events show that it has not been another ‘get rich quickly’ scheme. The value of the world’s most popular cryptocurrency took a plunge in 2018. According to the industry website Coindesk, the value of bitcoin dropped by 30 percent in January, which was the highest drop in past three years. Though some of the investors, executives, and experts casted out bitcoin by referring it as a bubble, some of the experts predicted that it would grow exponentially by the end of 2018. It seems impossible to tell whether their predictions will be proved correct by the end of the year on the backdrop of the worst drop in three years.
Bitcoin has a reputation of losing its market value by half in a duration of a day. Though those declines have been short-lived, the dive is noteworthy. In past five years, the value of bitcoin took a dive by 30 percent three times only. The last plunge took place in November 2015. Given the regulatory scenario and precautions taken by governments, it seems difficult that bitcoin would take a stride the way it took in 2017. One of the prime reasons is the regulatory clampdown in various countries. This has affected other cryptocurrencies across the world as well.
The Securities and Exchange Commission (SEC) of the U.S. stopped trading of $600 million in initial coin offerings (ICO). It was the biggest interventions in the history in which SEC interfered in ICO, where digital tokens are used to raise the money. Moreover, the U.S. regulators brought charge sheets in three cases that involve virtual currencies. These steps provide a major blow to trust in the cryptocurrency which has no government backing as well. In addition, the social media giant Facebook announced that it will not display ads on its platform that promote virtual currency or initial coin offerings. The firm informed that it attempts to eliminate promotion of financial products and services that deceive or mislead users through promotional practices.
China, one of the largest markets for bitcoin trading, has taken steps to put restrictions on bitcoin mining operations. South Korea has been debating over a legislation that bans cryptocurrency trading in the country. Recently, hackers stole nearly $530 million from Japanese stock exchange, Coincheck Inc. These incidents give major setbacks and make investors wary of investing more into cryptocurrencies. The incidents taking place in Asian markets hamper the value of bitcoin across various exchanges in other markets across the world.
Kim Sang-woo, a 29-year-old investor from Seoul, South Korea, said he had been trading cryptocurrencies from past year. With $20,000 capital, he spread them out in over nine digital currencies including bitcoin and Ethereum. Though he made 10 times of the investment, he said he had cut some of his investment from digital currencies and invested in stock exchanges. This shows that investors have been losing their interest in making investments in bitcoin and other cryptocurrencies. The regulatory clampdown and uncertain events taking place in exchanges became prime reasons for fading bitcoin value. It seems unlikely that it will take a stride same as 2017 in coming year.