I believe in Bitcoin, and I believe that Bitcoin will bounce back; however, circumstances surrounding the market do not make this highly expected comeback to happen anytime soon.
The truth behind Bitcoin price determination is that Bitcoin price does not rise or fall by magic, but by a combination of factors in the market. Before concluding that Bitcoin will bounce back soon, first understand how Bitcoin got to near $20,000 late last year. The interplay of factors that held the coin to make waves is still in play, but this time, in the negative direction.
The Base of Bitcoin Believers are Declining
Recently, Allianz Chief Economic Advisor Mohamed El-Erian made an interesting statement. He said that Bitcoin got to 20,000 because the base of people who believe in Bitcoin was joined by more people. No matter what an asset is, it needs people to become successful. The reality on the ground is that a lot of investors have either converted their Bitcoin to Tether or Fiat to avoid further losses. This action further causes the price to keep swinging more and more, and it does not appear to stop anytime soon.
Bitcoin prosecution is still Ongoing
As stated earlier, any asset needs people to become successful. It is true that Bitcoin took a hit in price because of the threat by some governments and agencies imposed on its operation. A lot of investors in South Korea and China were forced to sell their cryptocurrencies to avoid punishment.
This form of prosecution which sent the Bitcoin price plummeting is still open-ended, and unless something is done, the Bitcoin price will continue to fluctuate negatively and might take a long time to bounce back. On December 6, 2013, China banned Bitcoin forcing the Bitcoin price to fall. Remember that China has not yet maintained a positive stance on cryptocurrencies, and it does not seem to stop anytime soon. Believe it or not, the fate of the Bitcoin price can be drastically changed by the Chinese government, something which is not happening today or tomorrow.
Negative news about Bitcoin being a bubble right from the onset made people invest with a high alert. The fear that Bitcoin may not have another all time high has forced people to withdraw their deposit, and the need to buy at this point of price is not working because renowned experts are already campaigning against its investment.
Disclaimer: The views expressed in the article are wholly those of the author and do not represent those of, nor should they be attributed to, ZyCrypto.
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