The Bitcoin price crash has been in the headlines for a generous amount of time. Considering the fact that Bitcoins are treated as one of the premier cryptocurrencies out there, a crash in the price could certainly not have been avoiding during any form of global turmoil.
The price of the Bitcoins showed a sharp turn for the negative axis once the Chinese regulators announced a ban on several organizations associated with raising funds by virtue of initial coin offerings, also referred to as the ICO.
These ICOs play a crucial role for a range of businesses, small and large, during their point of inception. ICOs allow entrepreneurs to raise the investment amount by selling crypto-currencies in favor of cash.
Bitcoin linked to tax evasion
The People’s Bank of China proclaims that this practice of fundraising, by virtue of digital currency exchange, is among the major proponents of illegal fundraising in the country. According to Chinese Officials, this practice also brings forth certain forms of tax evasion.
Despite the Bitcoin price crash, experts from several renowned financial institutions believe that this step may be shortlisted in the near future to aid the Chinese economy. This was emphasized in relation to the global ascendancy of Bitcoin as the most relevant, and used form of crypto-currency.
According to Fran Strajnar, the co-founder, and CEO of Brave New Coin, a renowned data and research company;
This quote was offered to CNBC by Fran Stranjar on the issue of the Bitcoin price crash. According to her, this BTC crash is temporary and shall soon fade with time.
What are the visible effects of Bitcoin price crash on the market?
The ban on the ICO did not have any form of direct effect on the pricing of the Bitcoin. It did not result in bringing the virtual currency value down, but rather, it paved the way for an ideal opportunity in the market.
The negative market sentiments placed pressure on the prices of several other virtual currencies in the market. This, in turn, affected the market to shift, where a number of active traders reacted causing at the time a sharp decline in the valuation.
According to Charles Hayter, chief executive officer and the founding pillar of Crypto-Compare, on the Bitcoin price crash, he was quoted as saying that;
As a matter of fact, the market effect has been predominantly focused on Bitcoin valuation, owing to it being among the most coveted forms of crypto-currencies in the present market.
According to Hayter, such a market effect on the Bitcoin price crash would not last for a very. Owing to the resilience of Bitcoin as the leading digital asset, the market effects would be relatively short-lived, and the market would naturally re-correct on its own. Hayter also said that “the long-term effects of this ICO ban would rather be positive since Bitcoin could actually avert a market monopoly.”
The price of Bitcoin prior to the ban on ICOs has been around US$4,580.00. Following the announcement of the ban on ICOs across China, the prices took on a steady decline losing over US$130.00in value. House later the value of Bitcoin was continuing to slide, losing as much as a further US$20.00 before noon the same day. By the end of the day, the market showed no further devaluations for Bitcoin, and rather stabilized.
Not the first time
The move imposed on ICOs for Bitcoin has not been the first one made by China. The financial heads of the Chinese economy have previously made attempts to gain an edge on the cryptocurrency.
During January and February, the Chinese The Central Bank issued a warning to all the digital currency exchanges that were operating in the Chinese market. The warning proclaimed that such institutions will be shut down, in order to eliminate the potential for any violation of Chinese law and averting the potential for the proliferation of money laundering schemes.
While the Bitcoin value crashes again, this price drop had been noticed from the period of time when Bitcoin was able to hit a seemingly lofty US$5000 dollar benchmark. This turn of events brings with it evidence that the Bitcoin prices have steadily been going down over a long period of time at a slow pace.
The Chinese ban on ICOs is somewhat a catalyst for the recent Bitcoin price crash. According to the financial experts, the price crash is predominantly a form of ‘bringing about future profits’ for investors who wish to play it safe at this point of time.
Strajner was quoted saying that;
This is further weight to the argument that the prices of BTC will likely bounce back in a matter of months, greatly reducing the long-term effect of the Bitcoin price crash on the global market.
Are there reported chances of any further depletion of value?
Taking into consideration the global popularity of Bitcoin, there are very little chances of any significant price drops in the future. Any fluctuations in the global evaluation of the virtual currency value would most likely be owing to investors selling off their shares en-masse, which is rather unlikely.
The phenomenon of BTC trade is expected to normalize within a very short period of time, and more traders and investors are anticipated to buy shares in Bitcoin. With the prospects of a Bitcoin price crash having a short-term effect, there is certainly very real potential for new investment opportunities in the leading cryptocurrency of the world.