Regulatory Pressures Drive Bitcoin Lower
The price of Bitcoin had a pretty bad performance since the start of the year with the main cause being fear of regulation that could impact negatively on the industry of digital currencies. For those of you that already know what bitcoin is, you should know that there is little or no regulation in the field and it seems that governments are beginning to think about implementing laws to prevent money laundering and foster the good functioning of the industry.
South Korea and China in the spotlight
The main risks come from South Korea, that is assumed to be considering banning all cryptocurrency exchanges. The country accounts for a fifth of the world daily trading volume of bitcoin and the implementation of such a measure will definitely have a negative impact on what bitcoin is today. The industry of cryptocurrencies is still developing and these changes will definitely shape it. There is still no concrete move from the government, but official statements point towards that move. The market expects to see whether the ban on cryptocurrencies will be implemented and, since risks are involved, this expectation has driven the price of bitcoin to lower levels.
China is the second cause to impact the bitcoin price in a negative way. The People’s Bank of China issued a statement on September 4th, 2017, where it mentioned that token sales are “illegal and disruptive to economic and financial stability.” The statement was seen as very bearish by the market and the bitcoin price slipped lower.
The issue of bitcoin regulation is expected to be in the spotlight during 2018. After an unprecedented move in 2017, the price of bitcoin is already almost 50% lower, located around 10,250, after hitting an all-time high near 20,000 in December 2017.
Even though various analysts suggest buying after strong dips, a 50% drop in such a short period of time really hurts the bullish momentum and any professional should question the health of the bullish trend that was in play last year.
Many analysts are now seeing the price as under pressure as long as the news stays negative for bitcoin.
The issue of regulation will be under scrutiny from the market as it can definitely shape the system and change what bitcoin is today. Any person wanting to invest in cryptocurrencies, in particular, bitcoin, should watch carefully how the situation evolves over time since volatility is expected to be at high levels.
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