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Why Bitcoin Has Plunged

Published 04/11/2018, 08:45 AM
Updated 07/09/2023, 06:31 AM

Bitcoin remains one of the most infatuated digital currencies on the planet, and for good reasons; the cryptocurrency has routinely seized global headlines and refused to let go, enrapturing a global audience with the way its valuation routinely soars, only to plunge a few days later. Thus far, 2018 has been a less-than-stellar year for Bitcoin, and many analysts and would-be coin investors are beginning to scratch their heads as they attempt to figure out just why Bitcoin has plunged yet again.

Here’s the method behind Bitcoin’s madness, and how the popular cryptocurrency might fare as the rest of the year plays out.

The SEC continues to haunt Bitcoin

It’s no secret that Bitcoin’s valuation plunged earlier this year after the SEC warned it would be taking a harsher stance towards cryptocurrencies in general. Thus far, the cryptocurrency has remained mired in controversy when it comes to grappling with central banks and governmental authorities, as the relatively regulation-and-scrutiny-free nature of Bitcoin has remained both one of its greatest allures to investors and one of its greatest pains to governments in charge of managing markets. Speculation that Bitcoin may be losing out to some altcoins, too, has led many investors to clutch their money close to their chest instead of throwing it behind the world’s most popular digital currency.

But is Bitcoin really on its way out? Despite the increased scrutiny the cryptocurrency is enduring from central governments around the world and the intense competition its facing from leading altcoins, Bitcoin remains one of the markets most-discussed facets, and for good reasons. The number one digital currency remains favored by those investors who want to avoid the overly-prying eyes of central banks, and the technological advancements powering Bitcoin and other cryptocurrencies in the contemporary age remain exciting and alluring to a myriad of investors.

Still, the charm and allure offered by Bitcoin aren’t immune to the market’s whims; Bitcoin recently lost as much as 5 percent of its value, for instance, and the digital currency market is being viewed with intense dismay by many investors who fear that increased regulations could spell out the beginning of a serious long-term slump. With Bitcoin having plunged to be worth significantly less than the $7,000 mark, many crypto-investors are beginning to spread rumors that the king currency’s time in the spotlight could be coming to an end.

Such fears are probably overblown; Bitcoin has suffered from tremendous plunges before, after all, only to roar back with a vengeance that took many of its critics off guard. Still, the recent plunge puts seriously dampens many of the high-hopes some investors had for the cryptocurrencies future, and increasingly negative headlines surrounding Bitcoin could prove to be seriously problematic for the currencies long-term valuation.

The days of positive press have passed

Bitcoin’s once-impressive valuation, which at one point seemed like it would never stop soaring, was in many ways buoyed by the positive press the cryptocurrency enjoyed around the world after its historic rise to global prominence. These days, however, the media coverage surrounding Bitcoin isn’t always so positive; news that money-laundering rings are utilizing Bitcoin to cover up illicit drug money looks quite bad for the cryptocurrency, for instance, and could stand to drive many newcomers to the virtual asset away.

It will take more than a few bad headlines to sink Bitcoin’s value in the long-term, of course, and future news articles could garner praise for the cryptocurrency in the event that it roars back above the $7,000 mark, but investors should understand that the days of Bitcoin’s Camelot, when the cryptocurrency was regularly lauded in the press and enjoyed fevered investor interest around the world, could very well be gone. The massive erasure of gains that Bitcoin in India suffered when it dropped well below $7,000, too, will discourage even many long-term proponents of the virtual currency when it comes to keeping their assets.

Still, critics of Bitcoin and investors who are getting cold feet probably shouldn’t kid themselves; the king of cryptocurrencies may be going through a rough patch right now, but Bitcoin’s history has shown that the currency has risen from the ashes time and time again. While it’s unlikely Bitcoin will be reclaiming the immense value it lost thanks to its recent plunge, it stands to reason that the cryptocurrency remains a relatively sound investment for crypto-holders with an eye on the long-term future. If Bitcoin’s long-term decline continues for the next few months, the market may truly become spooked, but the recent plunge in valuation is being viewed by many as business-as-usual for the cryptocurrency, which is no stranger to speedbumps when it comes to its valuation. Keep an eye on the fundamentals driving the cryptocurrency market forward, and you’ll be well-informed when the time to make a decision about your Bitcoin holdings arises.

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