For the first time since Nov. 24, 2017 and mere weeks after hitting almost $20,000 in December 2017, one Bitcoin has a trading value of well under $7,000.
Bitcoin’s volatile but steadily declining trading value is sparking new investor fears of an imminent bursting of a Bitcoin speculation bubble.
For frenzied speculators, the sky seemed to be the limit just a month ago.
Now, barely 11 weeks after Bitcoin flirted with $20,000, its value roughly a third of that stunning high.
Bitcoin has lost a breathtaking $60 billion dollars in value since late 2017. The cryptocurrency’s value fell by over 20% during the first week of February alone.
Nouriel Roubini, partner at Roubini Macro Associates and a well-known prognosticator of market bubbles, recently called Bitcoin the “mother of all bubbles.”
Referencing the cryptocurrency’s regulatory woes Roubini said, “virtually every Group of 20 country is talking about cracking down on the phenomenon as policymaker worries grow.”
There are numerous extenuating factors that have contributed to Bitcoin valuation woes. Bitcoin has no transaction infrastructure like an actual currency, for one.
International pressure for cryptocurrency regulation also is weakening the idea of cryptocurrency as a global, extranational means of exchange.
Fears expressed by international governments for Bitcoin’s potential to be used for money laundering purposes, fraud or to clandestinely finance international terrorism also have stunted the cryptocurrency’s valuation.
A recent, brazen digital heist in Japan of more than $534 million worth of a Bitcoin analogue called NEM has not assuaged investor confidence in cryptocurrencies either.
The cybertheft, which occurred in late January, has yet to solved.
Scam fears grow
Coincheck, which handled the accounts in the hack, had its offices and records raided by an embarrassed Japanese government. Japan is one of the most lenient countries on the planet in terms of cryptocurrency regulation, yet its embrace of Bitcoin has yet to pay off.
Social media site Facebook has banned all cryptocurrency advertisements due to fears of online scams enabled by deceptive and misleading advertising practices.
Multiple countries, and especially China, Vietnam, Indonesia and South Korea in Asia, have banned or discussed banning the trading or use of cryptocurrencies.
Also adding to cryptocurrency legitimization problems, multiple banks and credit card issuers won’t allow credit card holders the option to buy cryptocurrencies via credit.
“Bitcoin is in trouble,” said Lukman Otunuga, an analyst at Forextime.
“Price action suggests that bears are clearly in control, with further losses on the cards as jitters over regulation erode investor appetite further.”