The Bitcoin Price Is Tanking — Here’s Why
The bitcoin price bull run over the last month, which saw it climb from around $6,300 to highs of $8,400 in a matter of weeks, could be over.
Bitcoin has slumped by 5% over the last 12 hours, falling well below the psychological $8,000 mark as traders and investors fret over coming tax crackdowns and blockchain-based applications being adopted by the traditional financial institutions.
Bitcoin hit lows of $7,675 at pixel time, down from daily highs of $8,168, according to CoinDesk data.
Meanwhile, other cryptocurrencies are suffering — and many of them haven’t had quite the bull run bitcoin has over recent weeks to cushion the fall.
Ethereum is down by 6% over the last 24 hours, while ripple is down around 4% and bitcoin cash is off by 5%.
Here’s what’s pushing the bitcoin price lower…
South Korea, which has emerged as one of the most important markets for bitcoin and cryptocurrency in recent months due to its large volumes of trading, is mulling whether to pass a law that would end tax benefits for cryptocurrency exchanges.
Local authorities were cited as saying “cryptocurrency transaction brokerage is not effective in generating added value.”
“While crypto markets have seen rapid growth, such trading platforms don’t seem to be well-enough prepared in terms of security,” said Hong Seong-ki, head of the country’s cryptocurrency response team South Services Commission. “We’re trying to legislate the most urgent and important things first, aiming for money-laundering prevention and investor protection. The bill should be passed as soon as possible.”
Meanwhile, investors have been rattled this week by reports bank-owned currency trading utility CLS, along with enterprise software giant IBM, are teaming up to trial the blockchain-based Ledger Connect, an application that offers services from different vendors, with some nine financial institutions, including international heavyweights Barclays and Citigroup.
LedgerConnect will allow financial institutions to access distributed ledger technology-based services in areas such as know-your-customer processes, sanctions screening, collateral management, derivatives post-trade processing and reconciliation and market data.
A report out earlier today from Wired magazine shone a light on some of the issues and problems many power-hungry bitcoin miners are facing around the world as cities and governments try to find a way to manage them.
“These companies are using extraordinary amounts of electricity – typically thousands of times more electricity than an average residential customer would use,” a spokesperson for the New York State Department of Public Service told Wired. “The sheer amount of electricity being used is leading to higher costs for customers in small communities because of a limited supply of low-cost hydropower.”
A blockchain expert with auditing firm PwC called the current mining energy crisis a “crucial moment for bitcoin.”
It was revealed by CoinDesk today the first coder to work alongside bitcoin’s pseudonymous creator Satoshi Nakamoto, Martti ‘Sirius’ Malmi, is joining a team of developers launching a new cryptocurrency called axe.
However, there’s plenty of good news about at the moment for bitcoin and cryptocurrencies.
The U.S. Securities and Exchange Commission (SEC) is currently weighing whether to approve a bitcoin exchange-traded fund (ETF), a request filed through the Chicago Board of Exchange (CBOE) by New York-based VanEck and blockchain platform SolidX.
A decision is expected in August, though many are wary it could be delayed for a number of months.
Elsewhere, a survey out late last week suggested the bitcoin and cryptocurrency investment market has plenty of room to grow.
According to the poll of almost 2,000 U.S.-based investors, just 2% of investors say they currently own bitcoin, and less than 1% plan to buy it in the near future. While most investors say they have no interest in ever buying bitcoin, about one in four (26%) say they are intrigued by it but won’t be buying it in the near future.