Cryptocurrency Value Drops
From：Taiwan Trade Center Chicago
The value of cryptocurrency has slowly dropped throughout the year of 2018. This decline was brought sharply into focus on 11/20/2018 when the price of Bitcoin fell 13% and a further 25% through the rest of that thankfully short Thanksgiving week. At the time of writing the value of a single Bitcoin is roughly $4,400 which is the first time the famous cryptocurrency has been valued at less than $6,000 in recent months. The phenomenon is not unique to Bitcoin, less famous cryptocurrencies are seeing similar decreases in value. Litecoin is currently valued at it’s lowest point in the year of 2018 at $32. While no one is sure exactly why cryptocurrencies have lost their shine there are several reasons that may contribute to the changes in cryptocurrency fortunes. Recently Bitcoin has come under examination by the US Justice Department. It is believed that a firm called Bitfinex has been inflating the price of Bitcoin by performing wash trades which create the illusion of activity and boost Bitcoin’s value.
To avoid further issues with the Justice Department it appears that Bitfinex has discontinued this practice, causing Bitcoin to drop to it’s true value. Although it should be noted these allegations have been strongly denied. Another explanation also involves investigations, but in the form of regulations being in forced on the previously unregulated cryptocurrency market. The US Security and Exchange Commission has fined two cryptocurrencies for failing to register their initial coin offerings or ICOs as securities. However, it is worth noting that this is not at all a surprise, regulative scrutiny is inevitable and expected. Furthermore, the scrutiny is justified according to advisory firm Statis Group it is estimated that 85% of ICOs are scams.
A final theory for the value decrease is that divisions within the Bitcoin community itself. These divisions in turn set off a huge sell-off of Bitcoin assets. Differences arose due to the fact that Bitcoin can only process a small number of transactions per second which leads to bottlenecks for users. A group within the Bitcoin community formed an alternative to Bitcoin dubbed Bitcoin Cash in 2017. This in fighting has caused investors to be warry of further investment into Bitcoin fearing that the currency will be further fragmented. Nevertheless Bitcoin and the popularity of cryptocurrency seems to be here to stay, these decreases in value seem to be growing pains as cryptocurrency becomes increasingly mainstream and faces more external scrutiny.