2018 has been a really bad year for Bitcoin so far. The cryptocurrency, which scaled phenomenal heights in 2017, has been sliding down steadily since mid-December last year. This last week has been the worst for the digital currency, with its prices dropping below the $8000 mark for the first time since November last year. Bitcoin managed to recover somewhat and is now currently trading at $8306.1.
Bitcoin has been struggling under wave after wave of bad news since it reached its peak on December 18, when it touched an all-time high of $19,511. Countries and companies across the world are clamping down on the digital currency.
There have been regulatory threats from South Korea, India, China and also the US. China has also begun the process of pushing out bitcoin miners from the country. There are huge fears of cryptocurrencies as a whole being used for illegal and criminal activities. Facebook has banned cryptocurrency ads.
Many banks in Europe, Indonesia and the US have warned their customers against speculation in cryptocurrencies, especially Bitcoin. In fact, JP Morgan Chase & Co. and Bank of America Corp. announced on Friday that they were going to stop customers from using credit cards to buy cryptocurrencies.
The biggest hit to the creditability of cryptocurrencies has been the number of thefts at various exchanges in the short history of the digital currencies. The latest – and by far the largest – heist took place last week at the Japanese cryptocurrency exchange, Coincheck. These heists are just highlighting the lack of security in the cryptocurrency market.
According to Lukman Otunuga, a research analyst at Forextime Ltd., Bitcoin is in a lot of trouble. The markets are beginning to look decidedly bearish, with investors getting more and more worried about clampdowns through regulations from various governments.
Bitcoin already tumbled 21% this past week, and has already lost more than 60% of its market value since December 18. Its rivals, Ripple, Ether and Litecoin aren’t faring much better, with the altcoins falling more than 28% last week.
In an interview with Bloomberg Television, Roubini Macro Associates’ Nouriel Roubini said that the Bitcoin bubble is finally bursting. He said that almost every single country in the G 20 group (which consists of 19 countries as well as the European Union) is talking of clamping down hard on cryptocurrencies.
Roubini called the entire cryptocurrency world a scam, saying that the only use for these digital assets so far has been speculation; there haven’t been any really solid real world uses for cryptocurrencies so far.
The New York University researcher also said that cryptocurrencies were also negatively impacting the environment. He was referring to the humungous energy consumption that was required to mine Bitcoins and other altcoins.
The biggest hit on Bitcoin, however, has come from the government crackdown on the cryptocurrency in South Korea. South Koreans were leading the world in Bitcoin (and other cryptocurrencies, to a smaller extent) trade. Trading was so intense in the country that prices of the digital currency had become 51% higher than the rest of the world in early January. In fact, this premium was so strong that it was nicknamed the Bitcoin “kimchi premium” – after the favorite South Korean side dish.
Now, prices have corrected themselves in the country, with Bitcoin trading on par with the rest of the world. This drop is a result of pressure to sell from regulators in the country.
With so much negative sentiment against cryptocurrencies and Bitcoin in particular, it remains to be seen whether the digital assets will survive this onslaught.