September Bitcoin sell-off signals a Change in its Fortune?
Does the September Bitcoin sell-off signals a change in its Fortune? The most recent setback of Bitcoin could well signal a change in people’s attitude towards and confidence in it. Or was Bitcoin’s recent crash just a blip?
AtoZForex – As the first ever cryptocurrency, and an unprecedented phenomenon as currencies go, bitcoin is now known to be one of the most lucrative (and volatile) assets on the planet. When it was created, it was worth virtually nothing, but one bitcoin has now exceeded a value £3,500.
Yet, after the strong growth in preceding months, the markets witnessed a September Bitcoin sell-off. Right after China introduced the idea of potential regulation in the future and their ban on ICOs. What can the market expect next on Bitcoin’s price action?
China is a significant market for cryptocurrencies
China is an incredibly significant market for cryptocurrencies, and as such there is huge demand for bitcoin in the country. The recent decision of the People’s Bank of China to block initial coin offerings, or ICOs, caused the cryptocurrency to crash by 20% after having enjoyed an incredibly strong rise in the previous days.
One of bitcoin’s main advantages, at least to those who own it, is that it is completely free of interference from any government or external body. Anything which would change this is bound to affect people’s confidence in the cryptocurrency. So the reaction of bitcoin to China’s decision was hardly surprising.
Was Bitcoin price overvalued?
Until now bitcoin has had a kind of invincibility about it. As if it would never suffer a downfall. It is unregulated, decentralised and completely international. Meaning that it is only influenced by supply and demand.
Whilst some believe that bitcoin is overvalued and a bubble waiting to burst. This most recent setback could well signal a change in people’s attitude towards and confidence in it. It remains to be seen how it reacts after this, but it is likely that only regulation. Or outside interference will have any significant impact on its market behaviour in the long run.
The Future of Bitcoin
Since bitcoin is so new in comparison to other, regulated currencies. It is incredibly hard to predict how far it will go in terms value. Those trading forex through a broker like LCG may well see it being more commonly introduced as an asset on various different online brokers. As well as potentially being traded against other currencies. This may well stimulate a further surge in demand.
As such, some people believe that the only way is up for bitcoin, given is global accessibility and reputation as an incredibly lucrative asset.
Ultimately, it seems that bitcoin’s recent crash was only a blip, and it is likely to swiftly recover as long as it remains free from regulation. That being said, it is hard to say how its reputation may affect government interest in things like regulation/taxation, so there is still an element of uncertainty surrounding it.
Luke Hatkinson-Kent worked as a Financial Analyst in London after graduating in Economics from the University of Manchester. Taking this experience and mixing in his passion for journalism, Luke has gone on to work for himself, writing Freelance financial news pieces.
He has produced detailed reports on stock market movements as well as financial current affairs articles for a number of high-profile online publications.