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What is the reason for the falling value of Bitcoin

Cryptocurrencies are highly volatile: unlike fiat money, the digital tokens may lose their value dramatically or gain in price in a matter of a day. With its ROI over 9000%, Bitcoin drops in price as seriously as gains its value. What exactly Bitcoin price depends on, and why Bitcoin dropped recently? Let’s find this out.

What causes BTC price drops and ups?

The Bitcoin exchange rate is affected by many things, from the statements of famous businessmen to hacking cryptocurrency exchanges. Let’s talk about some important factors that affect Bitcoin exchange rate fluctuations.

Major players

Unlike key fiat currencies, Bitcoin’s market capitalization is very small. $125 bln (the capitalization of BTC in May 2018) is almost eight times less than the capitalization of Apple alone. Therefore, the course on the exchanges to a certain extent can be manipulated by large coin holders. They can pump and dump the course. Pumping is an artificial increase in the exchange rate, which contributes to the hype and massive buying up of coins (which in turn increases the rate even more). At the peak of trading, the “pumpers” are dumping:  they begin to sell their assets getting the maximum profit. The course is sharply reduced.

Good News – Bad News

Hype, informational background, advertising, opinions of authoritative people or companies – all that also affects the demand for Bitcoin, and therefore, its course. News about hacking of user funds or the bankruptcy of exchanges traditionally lead to  depreciation. Positive comments about Bitcoin from the traditional financial sector, government regulators, or simply reputable members of the community can encourage users to buy coins.

Regulation

Since the beginning of 2018, the cryptocurrency seems to have lost the general battle with the Chinese authorities. Given that China is one of the largest cryptocurrency markets, and most of the Bitcoins are mined by Chinese mining pools, the legal framework ...

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