The cryptocurrency market has been very volatile this week, with Bitcoin trading at a near two-month low.
But why did bitcoin drop so much?
Here are three reasons why Bitcoin is underperforming:
Bitcoin futures were launched by two major exchanges yesterday. The CME Group and CBOE Global Markets both launched their derivatives products for the cryptocurrency on Sunday night. While this was widely expected, it does mean that some investors are no longer holding onto their coins in anticipation of future gains. This could also have been exacerbated by the launch of Bitcoin futures on Nasdaq next week.
The SEC may not approve an ETF for another year or longer. The Winklevoss twins have been trying to get approval from the SEC since 2013 but the regulator has repeatedly turned them down because they say it’s too risky to allow an ETF with such little regulation over cryptocurrencies like Bitcoin and Ether (Ethereum). If they had been approved, many investors would have seen this as a sign that these coins are legitimate and it could have caused a surge in demand that would have pushed prices even higher than ever before. However, now that there seems to be no immediate end in sight for this saga, many investors are choosing to sell off their coins before waiting around any longer.
Bitcoin has been on a rollercoaster ride over the past year. It’s been at the center of a lot of hype and excitement, with new investors pouring money into it every single day.
But if you’re new to the cryptocurrency space, you might be wondering exactly why bitcoin has dropped so much in recent weeks. Here are some of the most common reasons why:
- The US dollar is strengthening again
- China’s crackdown on cryptocurrencies
- India’s ban on banks dealing with crypto companies
Over the past month, bitcoin has been falling in price. This is due to a number of factors.
The most significant reason for the decline is the fact that many investors are selling their bitcoins to pay off their taxes. This is due to the IRS forcing Coinbase to send out tax forms to all of its users and asking them to report their gains or losses from last year. Most people don’t want to report their gains because they don’t want to pay taxes on them, so they are trying to sell off their coins before they have to file their taxes.
Another reason why bitcoin has been dropping so much lately is because of the upcoming hard fork scheduled for November 15th, which will split Bitcoin into two separate currencies: Bitcoin Gold (BTG) and Bitcoin Cash (BCH). There is a lot of speculation about what this new hard fork will mean for bitcoin’s price, but many believe that it will cause more investors to sell off their bitcoins because they don’t want to risk losing money on this new currency if it doesn’t perform well after it launches.
Bitcoin has also been dropping in value because of its volatility over the past few months. In late October 2017, bitcoin reached an all-time high of $5,000 per coin before quickly falling back
Bitcoin has been on a wild ride in 2019.
The cryptocurrency hit an all-time high of $13,941 in December 2017 and then dropped significantly over the next year.
The price of bitcoin fell below $4,000 in February 2018, but it has since recovered to nearly $11,500 as of June 2019.
Bitcoin’s price volatility is due to several factors:
Regulation threats. Countries like China and South Korea have cracked down on cryptocurrencies by banning exchanges and ICOs (initial coin offerings). This caused investors to panic and sell their holdings, which further depressed the price.
Adoption issues. The lack of a use case for bitcoin has limited its adoption as a currency or payment method by merchants.
Scandals surrounding crypto exchanges and “pump-and-dump” schemes that artificially inflate the price of cryptocurrencies by inflating trading volume with fake orders.
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