Bitcoin is trapped in some of the most bearish conditions this year. At the time of writing, it is trading for a little over $5,614 – a slight improvement over yesterday’s year low of $5,358. The question on everyone’s mind now is “What caused the price drop and will it rebound?”
What’s Going on, Here?
There are several reasons as to why the Bitcoin price drop is likely occurring, though two really stand out. The first, according to some analysts, is that there is a lack of “new money” entering the cryptocurrency market. Either the Bitcoin arena has lost steam, or new investors are uninterested or too afraid to enter the market. In any case, it seems the primary trades occurring are between established or professional investors that have faith a bull run could occur at any time or are too deep in the market to exit.
Nick Cawley, an analyst at Daily FX, notes:
The speed with which cryptos crashed Wednesday indicate that there is very little fresh money, buying interest in the market, and that stops were limited in size.
It’s the Child’s Fault!
However, the second main reason has to do with Bitcoin’s little brother Bitcoin Cash. Still a relatively new coin, Bitcoin Cash emerged just over a year ago after Bitcoin underwent a hard fork in August 2017. The currency went on to become the fourth-largest cryptocurrency by market cap, though at press time, it’s trading for just over $390 despite holding figures in the $500+ range a few weeks ago.
Yesterday, Bitcoin Cash underwent its own hard fork. This, itself, was nothing special; Bitcoin Cash had undergone hard forks in the past to little or no challenge. Most have gone uncontested in the past, but this specific fork marked a different age for the son of Bitcoin. Many had differing views on whether the fork should happen or not, and some of the biggest names in the industry saw themselves trapped in personal wars with each other.
Opinions Are Shifting
Bitcoin evangelist Roger Ver, for example, has been duking it out with Australian Craig Wright all week. Ver – who’s passion for Bitcoin has since shifted somewhat towards the Bitcoin Cash arena – is eager to see BCH remain as it is, while Wright wants to see something different. Many analysts are blaming the fork and the negative reactions it is spiking on Bitcoin’s sudden decline.
Co-founder and CEO of the crypto trading wallet Luno Marcus Swanepoel comments:
This drop in the price is more than likely due to the upcoming hard fork scheduled by bitcoin cash. The bitcoin cash blockchain has been undergoing scheduled hard forks every six months to upgrade and improve the protocol. In most cases, these hard forks are uncontested with the whole community supporting them. In this case, however, consensus couldn’t be reached with two factions emerging and proposing different solutions for the upgrade.
Bitcoin Remains Popular
Despite the nasty drop, many are remaining adamant that bitcoin still has a fighting chance. Think Markets UK’s chief market analyst Naeem Aslam explains:
The simple fact is that I am not selling bitcoin in my portfolio. In fact, I am not even interested in this day-to-day market action. The recent sell-off hasn’t changed my view about the technology or the potential it has. Wait for the currency or the debt crisis, and the day it knocks on the door, guess who is going to answer? Bitcoin.
What factors do you think are responsible for Bitcoin’s drop in value? Will it rebound? Let us know in the comments below.
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