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Bitcoin’s volatile history looks set to continue. On Wednesday December 5, Bitcoin slumped again, sliding down to below $3,700, not far off its low for 2018, $3,522.58, and making it the biggest monthly drop in over seven years.
Bitcoin’s history is steeped with volatility, in 2017 the popular cryptocurrency reached its record high, hitting $19,511, before taking a dive in 2018 and never recovering to those heights. It now looks like Bitcoin is falling again, casting a dark prediction on Bitcoin’s 2019 predictions.
Bitcoin started slumping again last month when two software development factions for the digital coin failed to agree on a way to upgrade the offshoot of the original Bitcoin, leading to a computing power arms race. But it isn’t just Bitcoin, but the cryptocurrency market as a whole that is slumping.
Why is the Crypto market on a downward roller coaster ride?
- Security on exchanges: Because some of the major exchanges, who have ample protections in place, haven’t adopted cryptocurrency, investors are forced to use alternative exchanges. There’s nothing inherently bad about these exchanges, but they do tend to be less secure and as such more open to exploitation. In September this year, a Japanese cryptocurrency exchange was hacked leading to $59 million in losses.
- Public perception: Many people see the news of Bitcoin’s volatility and are put off cryptocurrencies altogether, believing it to be a risky endeavor. The major banks and governments are slow to show support for crypto, although this is gradually changing.
- Regulation: The lack of stringent regulation around cryptocurrencies makes them an attractive tool for criminals. Whether they are proportionately used this way or not, they certainly get bad press for it. This leads potential investors to believe it is not a good way to invest their money.
The issue is nuanced and we can’t point the finger at one aspect in order to determine why cryptocurrency seems to be slumping more than normal. The delay in the ruling of Bitcoin EFT by the US Securities Exchange Commission isn’t helping either.
For Bitcoin at least, the near future isn’t looking to promising. Mike McGlone, an Intelligence Analyst at Bloomberg predicts that Bitcoin to continue to fall to around $1500. It is difficult to look at any of this in isolation, we could be looking at a very different crypto future if attitudes towards crypto changes and more safety and security is built into the market.